New studies highlight fraud-fighting costs, strategies

Emboldened criminals are weaponizing AI, machine learning and advanced digital technologies to launch sweeping attacks on financial institutions, enterprises and civilians, according to new studies published Feb. 21, 2024, by Nexis Lexis Risk Solutions and SonicWall. Both studies offer prescriptive advice to financial and payments industry stakeholders on how to protect against identity theft, synthetic identity fraud and other sophisticated threats.

Bob VanKirk, president and CEO at SonicWall, stated the company's 2024 SonicWall Annual Cyber Threat Report found a volatile threatscape in 2023 that continues to grow in depth and complexity. "It has become clear that conventional network security isn't enough," he said. "Security professionals need assistance to cope with the overwhelming volume of cyberattacks and protect from the endpoint to the cloud."

Matt Michaud, global head of financial crime compliance at LexisNexis Risk Solutions, noted that the latest True Cost of Financial Crime Compliance Study – U.S. and Canada found 99 percent of financial institutions face higher costs for financial crime compliance, with combined costs of financial crime compliance in the United States and Canada at US $61 billion.

Balance internal, external resources

VanKirk advised U.S. and Canadian firms to take a strategic approach to financial crime compliance and consider outsourcing critical security needs to managed service providers to support IT departments and prevent alert fatigue. The role of MSPs is shifting from technical maintenance to raising the bar on customer security, as cloud deployments become an indispensable reality for businesses, he added.

Michaud acknowledged that skilled in-house teams play a crucial role in maintaining security compliance, but he advised businesses to look for ways to reduce labor costs and improve efficiency.

"Organizations also need to actively counter cybercriminals exploiting artificial intelligence, cryptocurrencies and digital channels," Michaud said. "Financial institutions must proactively equip themselves with comprehensive data sets, advanced AI/ML-based compliance models and robust analytics within their financial crime compliance solutions to swiftly identify new crime patterns."

Bad guys innovate, too

SonicWall noted that the threat landscape remains complex, with almost 800 strains of new variants discovered each day. Researchers anticipate increased attacks against small and midsize businesses, government agencies and enterprises in 2024, particularly in these key areas:

• Malware: Total global malware volume rose 11 percent in 2023, with Latin America and the United States logging the biggest jumps – 30 percent and 15 percent, respectively. Europe saw a 2 percent decrease overall, with the UK seeing the steepest decline of 28 percent.

• Ransomware: Overall ransomware numbers saw a 36 percent annual decline but spiked 37 percent over the summer months and second half of the year.

• IoT exploits: Global volume rose by 15 percent as connected devices rapidly multiplied and bad actors targeted weak points of entry to gain access to organizations' networks.

• Encrypted threats: A quieter approach by bad actors in the last year, encrypted threats spiked 117 percent globally.

• Malware: SonicWall detected 293,989 never-before-seen malware variants in 2023.

A copy of the SonicWall report is available at www.sonicwall.com/threat-report/

Prescriptive guidance

Lexis Nexis Risk Solutions endorsed balancing compliance effectiveness with the customer experience in the competitive arena of financial institutions, where service providers fiercely compete to attract and retain customers. Striking the right balance between user experience and compliance, researchers noted, will help reduce false positives while allowing legitimate transactions to proceed without inconveniencing customers.

Researchers advised stakeholders to embrace new technologies such as artificial intelligence and machine learning to stay a step ahead of criminals and counter increasingly sophisticated and automated attacks that utilize cryptocurrencies, AI and digital channels. In addition to partnering with compliance service providers, they added, companies should leverage advanced analytics to manage compliance costs.

A copy of the report is available at risk.lexisnexis.com/insights-resources/research/true-cost-of-financial-crime-compliance-study-for-the-united-states-and-canada?trmid=BSGENL24.CRPORT.PR.CS3P-1118106

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