Navigating fraud prevention for trading businesses: Balancing anti-fraud measures with customer retention?
In the ever-evolving world of trading, combating fraud while retaining customers is a critical challenge. Effective strategies involve a blend of thorough Know Your Customer (KYC) procedures, due diligence, portfolio analysis, risk assessments, continuous monitoring, and the adoption of innovative anti-fraud technologies.
Thorough KYC Procedures
Collecting and verifying accurate customer information is fundamental. Regularly updating vendor and client data helps detect discrepancies early and reduces fraud risks tied to outdated or manipulated information. Sharing customer data responsibly and collaborating across sectors can improve fraud detection by connecting relevant information quickly.
Due Diligence and Portfolio Analysis
Scrutinizing customer portfolios and transactions for unusual patterns is important. Dedicated fraud teams that combine business, IT, communication, and customer service experts can perform real-time monitoring, daily rule adjustments, and quickly respond to suspicious activities.
Risk Assessment and Continuous Monitoring
Establishing strong internal controls, like authorization workflows, segregation of duties, and regular audits effectively reduce opportunities for fraud. Continuous real-time monitoring combined with training employees to recognize fraud risks fosters a culture of vigilance and accountability.
Innovative Anti-Fraud Technologies
Use secure financial software with advanced encryption, authentication features, and built-in alert systems to detect suspicious actions. Employ features such as geo-blocking and spending limits on company cards to limit unauthorized spending.
Additional Measures
Whistleblower hotlines encourage anonymous reporting of unethical behavior, increasing fraud visibility and prevention. Maintaining strong documentation and evidence standards ensures audit trails that deter and detect fraudulent entries.
Scaling and Retaining Customers
To combat fraud without losing customers, trading companies need to ensure they have the necessary measures in place for scaling in both existing and emerging markets. This week, Pati Murtazalieva, VP of Global Sales Operations, will discuss how trading companies can combat fraud while scaling and retaining clients.
Regulatory Compliance and Verification
The Sumsub bi-weekly Q&A series has been launched to address frequently asked questions about regulatory compliance and verification. The series features experts from legal, tech, and other fields. Questions can be submitted through Sumsub's Instagram and LinkedIn accounts.
Trading is one of the most high-risk industries for fraud, money laundering, and terrorist financing, making it one of the most heavily regulated industries. Stay at the forefront of security by incorporating the latest anti-fraud technologies. The Q&A series takes place every other Thursday.
Juniper Research predicts $362 billion in losses from online payment fraud globally between 2023 and 28. Risk assessment for legal entities recognizes that fraud may occur within a broader network of legal entities connected to trading operations. Identify the nature of your customers and their portfolios, especially high-net-worth individuals and institutional investors engaged in large transactions.
Stay vigilant, stay secure.
Businesses in the trading sector should continuously monitor their customer portfolios and transactions for unusual activities, utilizing dedicated fraud teams that combine expertise from various domains such as IT, communication, and customer service. Innovative anti-fraud technologies, including secure financial software with advanced encryption, authentication features, and alert systems, play a crucial role in detecting and preventing suspicious actions.
