Cyber battleground: How tech facilitates and combats financial crime

The shift online of the bulk of our financial activity has opened up new frontiers for fraud, to the extent that experts say the risk is now at crisis level. Enabling technology means clever scammers have their pick of channels when it comes to such criminality, says Colm O’Flaherty, director, Financial Crime, at Deloitte.

“Technology has taken bad actors to light speed, providing them with increased anonymity and allowing them to work across borders through the use of cryptocurrencies and online platforms, which make tracking and apprehension challenging,” he explains.

The use of artificial intelligence (AI) and machine learning, O’Flaherty says, has made it possible to launch multiple attacks and scams through channels such as text, phone, email and social-media platforms in seconds. These technological advances are also allowing for more sophisticated attacks, such as complex malware and advanced social-engineering tactics, exploiting vulnerabilities in our increasingly digital lives.

“Individuals who may not be tech savvy are particularly at risk as they navigate online banking, ecommerce, and even social media, which can all be exploited by criminals,” adds O’Flaherty.

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Even those of us who claim to be wise to scams can find it increasingly difficult to spot them, as a huge amount of our personal data has been mined by companies and/or stolen through data breaches and is readily available to bad actors who use it to target their attacks.

Frankie Cronin, business risk partner at Grant Thornton, says even basic technology allows bad actors to “automate and industrialise” their attacks on individuals, meaning such fraud is reaching unprecedented levels.

“It is mind boggling what is possible with just a few clicks,” says Cronin.

In any event, savviness and scepticism may mean little when someone is targeted with the sorts of sophisticated scams now possible; Cronin says bad actors are leveraging AI to make attacks much more personalised.

“They are obtaining publicly available information about the individual and then are able to talk to them as if there was a connection there,” he explains. Worryingly, AI is being used to copy and emulate people’s voices.

“I have seen many cases of this where an individual’s voice is manipulated and used to leave a voice note for somebody, requesting money or financial information,” says Cronin. “The person really believes it is them and readily complies.”

On the other hand, technology is playing a critical role in financial crime prevention as enhanced detection and monitoring systems can help banks and regulators detect activities in real time and stop fraudulent transactions.

“Technology can also help to better protect your accounts and profiles with banks, retailers and other services you use. Biometric verification, multi-factor authentication and digital ID verification tools have become more sophisticated, making it harder for impostors to access accounts illegally,” says O’Flaherty.

While many financial institutions are investing hugely in these technologies, “we tend as a population to be behind the bad guys when it comes to this”, Cronin admits. The breakneck speed of tech evolution means those fighting financial crime can be outpaced by fraudsters.

“It takes years’ work to implement these technologies and, in many cases, by the time it is implemented it can already be out of date,” he adds.

O’Flaherty agrees. “The ‘good guys’ are always playing with one hand tied behind their backs. Criminals operate without legal constraints, swiftly exploiting new technologies and loopholes,” he says.

“On the other hand, governments, regulators, banks and companies must undergo lengthy processes to implement new measures, from drafting and passing new legislation to deploying new technologies, all of which can take months or even years. This dynamic creates a scenario where it feels like we are always a few steps behind.”