This article is part of Kyckr’s new Future of Financial Crime Series which will feature interviews with leading industry professionals and thought leaders to learn more about the trends that will shape the future of financial crime.
The following is an interview we recently had with Jannies Burlingame, CPA,CRMA, Chief Financial Officer at Aptera Motors
What is the state of financial crime today?
Technology has evolved rapidly during the last two decades. In the most recent years, fraudsters exploited the pandemic to take advantage of individuals and businesses. The Coronavirus Aid, Relief, and Economic Security (CARES) Act were all vehicles used by financial criminals to target unemployment insurance, Paycheck Protection Program (PPP) loans, and Small Business Economic Injury Disaster Loans. Traversing freely online and taking advantage of zero geographical boundaries, phishing of Personally Identifiable Information (PII) was especially popular for the filing of unemployment insurance claims.
Parlaying on accelerated growth in technology, cyber-attacks targeting financial data have also skyrocketed in the past 18 months globally. Companies ranging from small enterprises to fortune 1000 are reporting a colossal increase in breaches and cyber threats. The unfortunate truth is resource-rich companies can afford to invest in information security processes to mitigate the potential impact of financial data breaches. Smaller companies, on the other hand, are more susceptible to ransomware, phishing, and hacking.
How has financial crime evolved over the past 5 years?
Technology is changing the way criminals perpetrate. An increase in online transactions has helped with the facilitation of digital fraud. New account fraud has spiked for credit cards, and social engineering has allowed perpetrators to exploit human weaknesses and vulnerabilities. Synthetic identity fraud (fabricated identity based on a hybrid of real and concocted information) is progressively popular and utilised to create avenues to manipulate the system.
Cited as one of the top 3 Business Risks after surveying nearly 3000 experts (Allianz Risk Barometer), global cyber-crime has caused a $1 trillion drag on the economy, up 50% from just two years ago. Cyber risks will likely become the “black swan,” rare, unpredictable, and with potentially deadly impact. Technology advancements and the dark web have obliterated the traditional proximity requirements for hurting the victim. The pandemic has offered up more vulnerabilities being exploited by cyber-criminals due to the limited protection reach with people working from home.
What’s the future of financial crime?
Businesses will likely experience increased instances of attempted cyber-attacks in this age of ransomware, phishing, and data breaches. The dynamic financial crime world can be described as VUCA, a term used to conflate the four distinct types of challenges: volatility, uncertainty, complexity, and ambiguity. Businesses face environments where change is the only constant. Benjamin Franklin’s adage, “an ounce of prevention is worth a pound of cure,” would be the best philosophy to employ when faced with mitigating financial risks.
With the convergence of lines between physical and digital transactions, companies need to leverage smart mechanisms to properly manage the complex landscape. A wise imminent step would be to utilise innovative technological capabilities such as artificial intelligence (AI) and machine learning (ML). Absent advanced resources, there are practical tips for those who chose to engage in preventive measures and safeguard against financial crime. For example, ensure properly authenticated passwords, performing security assessments, ensure proper incident response planning, conduct cyber-security awareness training, and control access to data.