Payments fraud remains prevalent across all industries. According to the 2020 AFP Payments Fraud and Control Survey, 81 percent of companies were targets of payments fraud last year.

For treasury, fraud detection and prevention goes hand-in-hand with regulatory compliance. In addition to the worry of financial loss, any loss of confidential information from payments fraud also opens the business up to regulatory and reputational risk.

When it comes to keeping treasury safe, secure, and in compliance, what do you need to know to get ahead of the curve?

Protect Your Organization Against Payments Fraud

Payments fraud comes in all shapes and sizes. Fraudulent payments, illegal funds transfers, data theft, breaches of embargoes and sanctions, and the current leader, business email compromise (BEC) are just a few. The number of potential target areas is growing and attackers and their tools are becoming more sophisticated, making it more difficult to prepare and defend.

How can you detect fraudulent activity and protect your organization against it? Start with employee awareness and training. Ensure strong controls and protocols are in place. Review your processes. And leverage the expertise of your partners — for the best results, it should be a collaborative effort.

Some simple process and technology changes can also help:

  • Role based access controls ensure that the right people get access to the right data in a controlled manner.
  • The four-eyes principle requires two individuals to approve an action, acting as both a safeguard and a regulatory mechanism. The concept, designed to ensure that no single person would have the power to commit and conceal fraud, also helps more quickly uncover honest mistakes.
  • Authorization controls allow you to set up sign off rules following the four-eyes principle tenets, with an automated workflow to streamline the process. For example, one person approves payment amounts, while another releases the funds to the correct accounts.
  • Fraud flagging filters can help you detect suspicious and potentially fraudulent activity, and flag related transactions for manual approval. Fraud checks should initially take place during onboarding as part of Know Your Customer (KYC) processes as well as at multiple stages of your payments flow, through your bank, connectivity and payments providers.
  • Advanced sanctions screening helps you filter out those embargoed countries, individuals and entities — which we’ll discuss in more depth next.

The Importance of Sanctions Screening

Sanctions screening helps organizations detect and prevent financial crime, such as money laundering and terrorism financing, reduce sanctions risk, and stay compliant with Anti-Money Laundering (AML) requirements.

AML and Combating the Financing of Terrorism (CFT) regulations exist to prevent money laundering and terrorism financing. Guidelines are based on Financial Action Task Force (FATF) requirements, but vary from country to country — making it challenging to know all the rules for every jurisdiction.

Sanctions screening compares your operational data against lists of sanctioned parties — which may include embargoed countries as well as companies or individuals such as terrorists, drug traffickers, and weapons dealers — to try to find possible matches. Sanctions lists are provided by regulatory sources such as the Office of Foreign Assets Control (OFAC), but can be augmented with additional data to become even more useful.

As AML enforcement often includes sanctions violations, the importance of sanctions screening goes beyond an ethical code. One of the biggest compliance fines of the past decade was imposed on the HSBC Group due to AML program violations. HSBC conducted transactions on behalf of customers in Cuba, Iran, Libya, Sudan and Burma – all countries that were subject to OFAC sanctions at the time of the transactions. The penalty? A cool $1.256 billion. While a company might be able to recover from reputational loss, that size of fine is enough to put most out of business completely.

Combat Fraud and Reduce Risk with Fides

In addition to helping you more efficiently connect to, communicate with, and transact with all your banks, Fides can help you reduce financial, reputational, and regulatory risk.

We offer a wide range of validation services, ensuring that clients’ consolidated account information such as balances, transactions, and booking texts from banking partners around the world are accurate and reliable, and payment initiations are seamless. As all payments are captured and managed with the same solution, fraudulent activity can be detected quickly. Fraud prevention measures include built-in compliance management features, rule-based checks, individual black/white lists and profiling based on payment history and analytics.

When it comes to sanctions screening, Fides is top notch. Our modern, bank-proven sanctions filtering adheres to local and international regulations. And on top of sanctions screening services, Fides provides additional security features for payment approval processes. With our flexible authorization controls, you can map users and groups to banks, validate payments, set up sign-off rules, four-eyes principles and more.

Fides helps more than 3,500 clients communicate with over 13,000 banks and payment providers across 200 countries. With Fides, you can reach further, and connect faster.