Green Sheet interviews NetGuardians' Joël Winteregg

As financial crime grows in scale and sophistication, driven in part by emerging technologies like AI, the need for innovation, cross-border collaboration and smarter prevention tools has never been greater. In this exclusive Green Sheet interview, Joël Winteregg, CEO of NetGuardians, shares his insights on the evolving global threat landscape, the critical role of public-private partnerships, and how financial institutions can harness the latest advances in technology to stay one step ahead of fraudsters.

1. What are some of the challenges faced when combating financial crime on a global scale?

One key challenge to the efficacy of combating financial crime is keeping pace with new fraud types and scams, particularly the use of AI. This technology has opened new methods and mechanisms by criminals to exploit targets. One of the most prolific uses of AI to defraud people is the creation of more realistic, but fake records and invoices to facilitate money laundering. Other threats include weaponizing identity via deepfakes to take over accounts as well as committing identity theft.

AI has fueled a surge in cyberattacks, with an average of 569,844 AI-driven attacks hitting retail sites daily in 2024. Its accessibility has lowered entry barriers for low-skilled criminals, enabling more frequent and sophisticated attacks.

2. To what extent is collaboration between different jurisdictions key when it comes to financial crime prevention?

Public bodies should specifically look to take an active role in private sector information sharing initiatives and focusing on developing secure platforms for sharing and oversight, in addition to enhancing projects to harmonize and standardize data. Greater collaboration between regulators, financial institutions and tech innovators is key to fostering a secure and innovative landscape, enforcing support within the whole ecosystem.

Additionally, there needs to be regular dialogue between data protection and privacy, anti-money laundering and counter finance terrorism authorities. This could be in the form of regularly scheduled forums, providing assistance to industry initiatives via regulatory sandboxes.

Fintechs have also risen to streamline processes in the world of finance, such as Intix, which have developed tools enabling FIs to monitor transaction data in real time through a single window. Such tools can help improve compliance efforts as well as lead to greater synergies between FIs and regulators, strengthening the efforts to combat financial crime.

3. How are new advances in technology allowing different authorities in different locations to share information and coordinate efforts better/faster?

AI is being used by FIs to aid in the detection of suspicious activity through identification patterns, reducing false positives, monitoring for anomalies, and remediation. Studies have shown that banks employing AI enhanced solutions have achieved reductions of up to 83 percent false positives (Finastra), have spent up to 93 percent less time investigating fraud and have detected new fraud cases.

Machine learning models play a key role too in categorizing threats into high, medium or low alerts, continuously improving accuracy by learning from historical data, leading to greater degrees of refinement regarding alert prioritization.

4. What recent success stories/achievements can we learn from in terms of financial crime prevention?

We only have to look to APAC, specifically Singapore, which has pioneered collaborative data-sharing platforms between FIs and the Monetary Authority of Singapore (MAS). Platforms such as MAS have enabled FIs to remain agile in the face of emerging threats by providing faster detection.

MAS has also introduced other platforms, such as the Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (COSMIC), to facilitate data sharing between FIs to help combat the flow of illicit transactions. This platform is the first of its kind when dealing with AML and is the result of collaborative efforts between MAS and six prominent banks in Singapore including DBS, OCBC, UOB, HSBC and Standard Chartered Bank.

5. What are some of the newest best practices being established today in various jurisdictions when it comes to fighting financial crime, especially from a preventative standpoint?

Following the latest regulation guidelines and enacting compliance measures will always be the first and best line of defense. For example, the Digital Operational Resilience Act or DORA, underscores the importance of ensuring FIs operational resilience to disruptions. This includes requirements for FIs to share information more securely, as well as introducing rules for managing third parties and ICT risks.

There are also other schemes to be aware of, such as mandatory reimbursement in the UK, which requires PSPs to refund victims of APP fraud. Innovative companies such as NetGuardians have created software systems which leverage Big Data to help businesses correlate and analyze behaviors across the entire bank system, as well as target specific regulatory requirements through predefined controls.

Collaboration with fintechs can help streamline navigating regulatory requirements, easing the burden on FIs and allowing efforts to be diverted elsewhere.

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