Financial crime continues to be a trillion-dollar issue and is a significant risk to the global economy. Despite significant investments in deterrence, prevention, and detection, criminals continue to be sophisticated in their use of technology to exploit loopholes in our financial systems, to perpetuate financial crime.

The trend of digitization, amplified by the advent of COVID-19, has changed the nature of financial crime and the way in which law enforcement detects it. For example, traditional cash-heavy indicators and physical document verification controls have become less relevant in the face of digital transactions. Consequently, firms continue to invest significantly in capabilities to uplift their financial crime protocols. However, despite considerable investments, financial crimes continue. Therefore, there is a need to bring updated thinking on the use of technology to efficiently balance risk, cost and outcomes.

However, organizations tend to be at different stages of technological adoption and often have a varying appetite and budget to take on such projects, especially as they must ‘parallel run’ new solutions alongside existing processes and are often dependent on the ability to effectively integrate with existing systems. Obviously, this has cost implications and requires organizations to commit to investing in change over the medium-to-long-term.

To combat financial crimes such as terrorist financing, money laundering, payment fraud, and to ensure banking compliance, organizations use a mix of technologies to stay on course – Artificial Intelligence (AI), Machine Learning, Natural Language Processing, Robotic Process Automation, Big Data Analytics, Cloud Computing, Privacy Enhancing Technologies.

We saw that 2022 experienced difficulties throughout the global economy, endured a heated political climate, and faced an ever-expanding list of new kinds of financial crime worldwide. Going forward, financial services organizations will emphasize and redefine an enhanced risk-based approach to fighting financial crime, as they look for more robust methods to overcome these complex and intertwined challenges, while being pressured to reduce costs in the face of an uncertain economy. Sitting at the onset of 2023, the economic environment is expected to be tough, a time of belt-tightening for many.

Given the economic backdrop of 2023 and the geo-political situation, criminals would have to become more inventive to maintain their income. While, the pandemic accelerated digitalization, yet there is still so much that is not done in the digital world. The potential is immense and that means many more markets for cyber-criminals to tap.

In our estimation, criminals will, most certainly, up the ante, and their methods will become more sophisticated. For example, remote onboarding of customers by banks, has given criminals a means to attempt ID fraud on a mass scale. All these ingredients – untapped markets, new technology, and an economic downturn – create the environment for new forms of criminality to thrive.

Next would be the use of deepfake technology – where audio and video footage is manipulated with artificial intelligence so that fake footage appears to be of a real person, is expected to be more pervasive in 2023. This technology has worrying implications. Deepfakes have already been effectively used in disinformation campaigns, such as a Russian video depicting a deepfake of Ukraine’s president Volodymyr Zelenskyy telling his troops to surrender.

Financial institutions are continuously targeted by criminals who are seeking to exploit their systems for financial gain. In 2023, we expect to see an increased use of synthetic media – created with artificial intelligence – to target financial institutions. One example of this is where deepfakes are layered with genuine information from an unsuspecting victim to build an identity profile for a completely fictitious person.

Given this, there is a pressing need to introduce solutions that effectively identify customers as being genuine, real individuals. The solutions, however, will have to be easy to use – and widely adopted – for them to be successful. Any solution put in place must balance the slick user experience that consumers have come to expect with the need to protect against criminal activity. And here is where EZDynamic can partner with your organization to put the right tech solutions in place, to slay financial crime, each time it rears its ugly head!

EZDynamic is a boutique management consulting firm that caters exclusively to the Financial Services sector.  Our Technology practice has been built on taking a business first approach in order to solve hard problems. The EZDynamic team is well equipped to handle your FinTech and Reg Tech requirements to help position your business at the forefront of your industry. EZDynamic’s other consulting verticals are Business Strategy, Regulatory Implementation, Change Management and Staff Augmentation.

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