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Preventing Payments Fraud Loss: The Power of a Consortium-Based Approach

September 8, 2022 by Verafin

Payments Fraud

Payments fraud is changing, and financial institutions are facing major challenges effectively managing the growing volumes of legitimate and fraudulent transactions. Meanwhile, fraudsters are focusing their efforts on Authorized Push Payment (APP) scenarios such as Business Email Compromise (BEC), and romance and employment scams, where your customers are manipulated into sending a payment. These APP frauds are particularly challenging to detect; the authorized customer initiates the payment, rendering most authentication-based controls, such as tokens and one-time passwords, ineffective.

As the payments fraud landscape evolves, so too must your fraud monitoring approach. Transaction monitoring approaches and analytics that consider only your own institution’s data are no longer sufficient to protect your customers. More than ever, financial institutions need a solution that leverages consortium-based counterparty analytics and cross-channel intelligence to provide a complete view of the payee-payer relationship for more effective payments fraud detection with fewer false positives.

Consortium-Based Counterparty Analytics – Enhanced Insight into Receivers

Siloed approaches to payments fraud detection are confined to the limits of an institution’s own information. With the rise in APP fraud scenarios, risk is migrating to the receiving side of transactions — financial institutions need visibility into the full picture of fraud, including insights into the payee, to effectively combat fraudulent transfers.

A consortium-based payments fraud solution provides this crucial insight by extracting information from thousands of financial institutions to profile hundreds of millions of counterparties and more effectively assess the risk associated with a payment. As payments are identified as fraudulent, detected mule accounts are recognized in any future analysis for all financial institutions who are members of the consortium. Leveraging an immense set of rich data, payees located at a financial institution outside the consortium are also rapidly profiled for a more complete picture of their transactions, interactions, and relationships to determine if an account is safe, or was created to facilitate fraud.

Cross-Channel Intelligence — Gain Visibility into Senders

Today’s payments ecosystem is fast paced and complex, with customers utilizing multiple channels, from wire to ACH and TCH-RTP payments. Financial institutions must quickly identify safe and fraudulent transactions across these multiple payments channels, without causing the unnecessary call backs or customer friction that are commonplace with conventional siloed approaches.

Utilizing cross-channel fraud detection and fraud management capabilities, your institution can see across multiple channels in a single solution to identify and understand your customers’ activities across all payments channels, and quickly determine safe and risky payment relationships. When a payment is fraudulent, your institution can stop the transfer in real-time, intervening before the funds are released, while maintaining speed and convenience for legitimate transactions.

Why Verafin: The Power of the Consortium

Payments FraudKeeping pace with payments fraud requires a robust, consortium-based solution. Verafin leverages the profiles of 300 million counterparties based on our consortium of 2200 financial institutions to detect and mitigate fraud across numerous payments channels, including wire, ACH and TCH-RTP. Through the power of the Verafin Cloud, you gain immediate visibility into suspected money mules identified by the consortium in real-time, and a deeper understanding of your customers’ interactions across multiple channels, all while reducing false positives.

To learn more about how Verafin can effectively protect your financial institution and customers against payments fraud with a consortium-based solution, download our Payments Fraud Product Brochure.

Verafin is the industry leader in enterprise Financial Crime Management solutions, providing a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Over 3500 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations. Leveraging its unique big data intelligence, visual storytelling and collaborative investigation capabilities, Verafin significantly reduces false positive alerts, delivers context-rich insights and streamlines the daunting BSA/AML compliance processes that financial institutions face today.

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