One of the UK’s largest banks, HSBC, has emerged as one of the first banks to confirm it is using automated tools to detect fraud under the new “failure to prevent fraud” offense that took effect on 1 September. These tools include cutting-edge AI developed with Google that monitors 900 million transactions a month across 40 million customer accounts.
Financial services firms need to think carefully where the risk of outward fraud, committed by employees or third parties to benefit the organisation, is present — perhaps within their sales departments where employee incentives could risk improper conduct, according to Signature Litigation LLP partner Duncan Grieve.
“Monitoring outward fraud is a practical challenge as it may require monitoring of conduct outside from internal systems,” he said. “As such, a solid compliance infrastructure usually requires a blend of technological and human oversight.”