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Black Friday, Cyber Monday, Cyber Week, Black November, Christmas and New Year’s vacations, aka the commercial part of the “Holiday Season.” For shoppers, retailers, and holidaymakers, it’s one of the most satisfying times of the year. For banks and payment service providers, however, the surge in spending and transactions that comes with this peak season can easily turn into an annual headache.
The holiday season is the time of the year when financial criminals can more easily take cover in the surge in global transactions to engage in money-laundering and other illicit activities. Cybercriminals are experts at impersonating people and organizations, which can pose an extra risk when consumers and do-gooders can be off guard as they relish in the frenzy, are feeling generous and more open to special offers.
To tackle the uptick in financial crime as transactions surge over the holidays, banks and payment service providers might ramp up compliance operations to support the increased data coming in from higher than usual money-transfer volumes, including both cross-border payments and domestic transfers.
But it’s not the only way to head off the compliance challenges posed by these seasonal fluctuations. Here are some ways to better prepare for any eventuality and make it through the holiday season with your resources and avoid trouble from the regulators.
Don’t get caught relying on last year’s cases
As we have seen since the beginning of the pandemic and surge in digital payments, reality changes very fast. Financial criminals change direction constantly to avoid getting caught. Realistically, it’s therefore not possible to rely only on what you know from the past.
Rules-only based transaction monitoring systems are therefore inherently outdated. They can’t be prepared for what new typologies might hit today or tomorrow. When the holiday surge hits and something new surfaces, there won’t be enough time to scramble and write new rules for the system to implement. The effort needed to investigate and analyze during and after a surge period can therefore impede on the capability to file SARs on time, exposing banks and financial institutions to higher costs fines.
Detect the anomalies in the crowd
Instead of telling the system what to look for like in a rules-only based method, machine-learning- based monitoring using AI can detect previously unknown types of irregularities. An AI-driven approach can manage the unknowns intuitively, calling out something that is out of the norm without knowing its first name.
Machine learning lets the data lead the way to the abnormalities and things that are different, saving on the need for analysts to investigate huge volumes of false alerts amid surging transactions. Benefits include:
- Avoid slowing down and blocking transactions
- Reduce false positive number and investigation time significantly
- Identify unknown cases in projects
As a result, analysts and compliance officers can benefit from a type of crystal ball to see what is happening in the transaction world irrespective of the number of interactions taking place when a surge takes place.
Don’t let your data have limits
During transaction surge periods, another way to be prepared to handle higher volumes is by using cloud-based systems.
Cloud-based financial activity is already significantly higher today compared with a few years ago. When the pandemic hit, the financial industry and payments ecosystem increased their adoption of cloud-based systems to accommodate remote working conditions.
As a result, there is an increasing need for solutions that can detect money-laundering in cloud-based environments.
When hosting on the cloud, a system can be rolled out quickly, even in just a few days. Simple API-based data connectivity and quick and easy implementation is possible with no need for adding additional IT resources and manpower.
Cloud-based transaction monitoring also provides elasticity enable quick and easy addition of space This scalability provides the ability to expand on demand while still continuously monitoring for financial crimes when banks and payment service providers face peaks and spikes.
High-performance data processing on the cloud is another benefit for managing large volumes of data at speed. Highly complex analytics on huge volumes of data can be reached in minutes instead of months.
Overall, the combination of AI using artificial intuition and cloud-based implementations can prepare banks and payment service providers with the ability to improve efficiency and ride through seasonal data storms.