Businesses Need Early Detection System to Prevent Fraud

As more businesses offer products and services online, fraudsters find loopholes and opportunities to take advantage of the digital shift. 

Maheswari Kanniah, group chief regulatory and compliance officer of Kenanga Investment Bank Bhd, said that having an early detection system is the best approach for businesses to avoid financial fraud.

 

Every scam has its pattern

Kanniah stated that every fraudster has a pattern. It is impossible to detect the patterns with traditional methods, especially in the digital age, as they are widespread and sophisticated. 

Organisations that use traditional, siloed and batch-oriented detection methods are distressed by numerous forms of fraud such as identity theft, payments fraud, and internal theft. These methods cannot identify the pattern without a huge resource expense or a major delay before detection. ,

She said that in the digital age, businesses have to fight fraud before it happens, and they need the latest technologies to do it, such as machine learning and artificial intelligence. 

Kanniah said that the best way to fight fraudsters is with a combination of speed and data. Most companies now find and use real-time techniques to reveal bad actors in their systems with high precision.

 

Types of scams

According to Kanniah, there have been many reports of scam cases since the Movement Control Period started. Malaysians had to embrace online platforms to carry out daily activities, and everyone became vulnerable to fraud.

For instance, in the 'i-Rakyat Trade' investment scam in 2020, the scammers attracted their victims by offering non-existent high investment returns as much as 13 times in the so-called international oil and gas industry.

There are also classic scams where scammers call unsuspecting persons while posing as the authorities, such as officials from the Royal Malaysia Police, Bank Negara Malaysia or Malaysian Anti-Corruption Commission and use scare tactics and social engineering skills to convince them to disclose sensitive information or transfer money out. 

She stressed that it is vital for the public and businesses to stay calm whenever they receive such calls and not reveal personal or financial account data as regulators would never ask to reveal such information via phone calls. 

 

Educating your customers & clients

Besides early detection, Kanniah said that financial knowledge coupled with financial literacy could stop businesses from falling victim to scams and fraud. She said that one of the essential steps is educating the clients and having continuous engagement about the dangers of fraud. 

She added that giving realistic views of the risks they might encounter and offering tips for safe transactions are well-received by clients and customers. 

According to Kanniah, Kenanga has various targeted campaigns to highlight the steps that clients should take to protect themselves against fraud. It also constantly reminds its clients to be aware of fraudulent schemes via emails and pop-ups on its online trading portals. 

As with most financial organisations, Kenanga has actively implemented strategies to prevent fraud, such as having multi-factor authentication requirements and ensuring proper verification steps before processing transactions.

Always be cautious of unknown callers as they could be scammers.

The bank also adopted and implemented fraud risk identification criteria and regularly monitors transactions, looking out for any red flags that could warrant further investigations. Kanniah said the bank continually reviews and enhances these measures to stay ahead of fraudsters.

But at the end of the day, it all boils down to the customers' alertness as to whether they themselves fall victim to the fraudsters. The fraudsters usually have numerous techniques, and they will use all the methods until they finally trap the customers.

Kanniah said that the bank believes that it can only do so much for the clients in education and reminders, but it still depends on their ability to identify the fraud when they face such situations. 

 

Staying safe online

Ganesh Thuraisingham, development head of the Association of Certified Fraud Examiners Asia Pacific, said there are many methods for cybercriminals to obtain one's identity and personal information. 

He said in numerous cases, businesses' systems get hacked due to one's carelessness or ignorance of basic security parameters. Once the system is hacked, the data can be sold or used against a person or organisation or leaked online.

Thuraisingham said that one must ensure the data they store or share on the internet is secure. One must also constantly educate themselves and the people around them about the importance of cybersecurity.

He said that though technology has made it convenient for everyone, it has also made it easier for hackers to steal people's data. Basic cybersecurity knowledge can help prevent and deter massive losses.

He said that it is always preferable not to believe everything we see on social media immediately. With the various types of scams being reported today, businesses must stay alert of unknown messages, even from known social media profiles. 

Thuraisingham also reminded businesses to always check before answering unknown messages. If they are unsure, they should always check with the actual account owner.

 

Source: The Malaysian Reserve

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