We are pleased to share the latest edition of "Typology Tales" for July 2024. This edition highlights the new typologies that our Anti-Financial Crime (AFC) community has carefully analysed and selected. Our community's collective efforts are crucial in staying ahead of evolving financial crime threats, and we are grateful for your continued participation and contributions.

AFC Community’s Role

Each month, our dedicated AFC community comes together to analyze and evaluate newly created typologies, selecting those that can significantly enhance the ecosystem's ability to prevent and combat financial crime. The typologies chosen for publication are those that offer the most promise in terms of effectiveness and applicability across various scenarios.

Key Highlights from July 2024 

These typologies have been meticulously curated to ensure they provide robust and actionable insights, ultimately helping to safeguard the financial ecosystem.

Theme of the Month: Account Takeover Fraud (ATO)

Account takeover fraud (ATO) is a type of cybercrime where unauthorised people access a user's account and use it for harmful purposes. This dangerous activity has increased significantly in recent times, posing a growing threat to both individuals and organisations. 

In this edition...

In this edition of Typology Tales, we delve into two typologies that compliance professionals can incorporate into their transaction fraud monitoring systems to proactively prevent account takeover in real time.

Typology 1: Surge in Multi-Party Transactions in Sizeable Values

A pattern of multiple parties making high-value transactions with one entity in a short period of  time suggests possible account takeover fraud. This requires a strategic review of transaction behaviours.

How It Works

• The typology monitors transactions involving a single customer who receives or transfers funds with multiple parties within a short time span.
• To identify potential account takeover risks, the typology groups transactions by the unique identifiers of senders and receivers within a specified time frame. By tracking these identifiers over a defined period, it can determine how many different parties have transacted with a particular entity.

• Simultaneously, the typology aggregates the transaction amounts linked to unique senders and receivers.

• It flags any entity that engages in transactions with a large number of different parties and exceeds a cumulative transaction threshold. This signals potential account takeover risks due to unauthorised access and high-value transactions.

Typology 2: Monitoring High-Value Transactions Across Multiple Payment Modes

Financial institutions may implement advanced monitoring to detect high-value transactions between senders and receivers through various modes, aiming to uncover potential account takeover fraud.

How It Works

• To effectively oversee the flow of funds, the typology tracks and aggregates transaction amounts based on the mode of transfer.
• Transaction amounts, including those made through cash or alternative payments, are further aggregated by the unique identifiers of the sender and receiver over a specific period.
• Entities showing high-value transactions across multiple payment modes over specified time frames are potentially flagged as suspicious. This increased activity may indicate that an account has been compromised and is being used to funnel funds illegally.

From the Media: Account Takeover Attacks Overtake Ransomware as Leading Security Concern

Research by cybersecurity firm Abnormal Security highlights that account takeover (ATO) attacks have become a top concern for security leaders. The 2024 State of Cloud Account Takeover Attacks report reveals that 83% of organisations experienced at least one ATO incident in the past year. 

Over 75% of security leaders rank ATOs among the top four global cyber threats, with nearly 50% facing more than five incidents annually and around 20% encountering over ten incidents. ATOs are now considered more significant than other threats such as spear phishing and ransomware.

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Unite in the Fight Against Financial Crime

Financial crime is a pervasive issue that requires a collective, centralised approach to intelligence gathering. That's why we have created the Anti-Financial Crime (AFC) Ecosystem, a network of experts who work together to share knowledge and develop strategies for combating financial crime.

If you are an AFC expert, we invite you to join our efforts and help us grow the AFC Ecosystem. And if you know any other AFC experts, please refer them to us so we can continue to expand and strengthen our network. Together, we can make a real difference in the fight against financial crime.

In the evolving landscape of financial crime, financial institutions need to intensify their scrutiny of transactions from entities with a long history of incorporation but sporadic or recent activity. This increased vigilance aims to detect and thwart potential account takeover fraud within savings accounts, ensuring the safety and integrity of financial systems.

Given below is a typology from Tookitaki's AFC Ecosystem. It details how to ensure your monitoring system triggers alerts transactions from entities with a long history of incorporation

Understanding the Typology

Setting Up Entity Historical Profiles

Financial institutions employ a function known as the "Incorporation Date of the Entity" to track and record the incorporation dates and transaction activities of entities. This function helps identify entities that have been established long ago but have shown recent or sudden transaction activities, which could be indicative of fraud.

Function Configuration and Data Aggregation

• Aggregate Fields: The system aggregates data on 'sender incorporation date' and 'receiver incorporation date.'
• Aggregate Function: Using the collect_set function, the system compiles a unique set of incorporation dates for each sender and receiver, providing a comprehensive historical perspective of each entity's transaction timeline.
• Group By: Transactions are grouped by unique identifiers like 'sender_hashcode' and 'receiver_hashcode,' linking each entity’s transaction history to specific account profiles.

Monitoring and Anomaly Detection

The system continuously monitors the transaction activities of these entities, comparing current transactions against historical data. Entities that have shown no or minimal transaction activities for a significant period since their incorporation are closely watched. A sudden spike in transactions, especially those of significant volume or frequency, triggers an alert. This scrutiny is particularly heightened if the entity's previous activity has been minimal or non-existent for years.

Flagging and Review Process

Transactions involving long-dormant entities resuming activity are flagged as high-risk. These flagged transactions undergo a detailed review to ascertain the legitimacy of the activity and to rule out any potential account takeover or other fraudulent intentions.

Investigative Measures

For flagged transactions, financial institutions conduct thorough investigations involving:

• Background Checks: Verifying the entity's background.
• Transaction Legitimacy: Confirming the legitimacy of the transaction.
• Entity Ownership: Ensuring the entity's ownership and operational status.

Preventative Actions and Customer Interaction

If fraudulent activity is confirmed, financial institutions take immediate steps to:

• Block further transactions.
• Secure the affected accounts.
• Possibly reverse fraudulent transactions.
• Contact entity representatives for further clarification and to ensure all parties are informed of the situation.

Compliance and Reporting Obligations

All suspicious activities are documented and reported in compliance with regulatory requirements. This ensures that the institution remains compliant with anti-fraud regulations and aids in broader efforts to combat financial crime.

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Enhancement of Monitoring Systems

Based on findings and trends observed from monitoring these entities, financial institutions continually refine their detection algorithms and update their monitoring systems to better identify and prevent potential fraud.

By closely monitoring the activities of entities incorporated long ago but recently active, banks can effectively spot unusual patterns that may indicate fraudulent activities, such as account takeovers. This proactive approach helps safeguard customer assets and maintain the integrity of the financial system.

Final Thoughts

Financial institutions must remain vigilant and proactive in monitoring and analyzing transaction activities, especially those involving historically dormant entities. This typology, sourced from Tookitaki's AFC Ecosystem, highlights the importance of advanced monitoring techniques in detecting potential fraud.

We encourage anti-financial crime professionals to join the AFC Ecosystem to access unique typologies and leverage community-driven insights for enhanced fraud detection and prevention. Together, we can strengthen our defenses against financial crime and protect the integrity of our financial systems.

In an increasingly interconnected world, the borders that once confined criminal activities are rapidly dissolving, aided by the rise of digitalisation and the pervasive reach of online platforms. The stark reality we face today is a landscape where fraudsters exploit digital payment systems to target individuals across the globe, particularly in the Asia-Pacific region. Organised fraud syndicates are not just local threats; they operate on an international scale, executing sophisticated scams that often outpace current preventative measures.

Case Study: A Transnational Crackdown on Job Scams

On 20 March 2024, a significant breakthrough came when the Commercial Affairs Department (CAD) of the Singapore Police Force and the Bukit Aman Commercial Crime Investigation Department of the Royal Malaysia Police joined forces in Kuala Lumpur. This joint operation was the culmination of extensive cross-border investigative efforts aimed at dismantling a formidable job scam syndicate.

Between October 2023 and January 2024, this syndicate deceived over 3,000 individuals, accumulating illicit gains of approximately $45.7 million. These scams primarily targeted Singaporeans, promising lucrative job opportunities that required victims to make upfront payments or divulge sensitive information under the guise of securing employment. The rapid escalation of these scams prompted an intensive collaborative investigation, which eventually led to the arrest of five Malaysians involved in laundering the proceeds from these fraudulent activities.

This operation not only highlights the severity and reach of transnational scams but also underscores the urgent need for global cooperation and shared strategies to combat these crimes effectively.

The Imperative of a Collaborative Approach

As we witness a surge in transnational fraud, the isolation of financial institutions in their silos makes them particularly vulnerable. The complexity and rapid adaptation of fraud strategies require that defences be equally dynamic and interconnected.

Collective Intelligence and Shared Responsibility

To counteract the evolving menace of cross-border fraud effectively, a collaborative approach is indispensable. The AFC Ecosystem initiative represents a commitment to fostering industry-wide cooperation and information sharing. Through this collective intelligence, we aim to establish a robust defence mechanism that not only identifies but also anticipates fraudulent activities, ensuring safe and secure societies. This shared responsibility is vital in creating an impenetrable barrier against the sophisticated mechanisms of modern financial criminals.

Considering the Typology of the AFC Ecosystem

Drawing from the AFC Ecosystem's insights, let's delve into the typology of transnational job scams. This framework is instrumental in understanding how these frauds operate and what measures can be employed to thwart their attempts.

Detailed Analysis of the Typology

Transnational job scams represent a highly organized and rapidly proliferating threat that exploits the aspirations of job seekers worldwide. These scams are not just about deceit regarding employment opportunities but involve intricate financial manipulations that siphon funds across international borders.

Operational Mechanics

• Initial Recruitment: The scam begins with contact through social media or other digital platforms, where victims are lured with high-return, low-effort job offers.
• Deceptive Promises: The roles are advertised as lucrative yet simple enough to attract a wide demographic, from students to the unemployed.
• Financial Prerequisites: Victims are persuaded to make upfront payments or provide personal information as a part of the onboarding process.
• Expeditious Expansion: To maximize profits before any potential crackdown, these operations quickly scale and replicate across various regions.

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Granular Red Flags and Risk Indicators

To effectively monitor and prevent these scams, it is crucial to recognise the following detailed risk indicators:

• Value: Transactions often involve small amounts that are usually perceived as low-risk by victims, making them less likely to raise immediate alarms.
• Volume: A high frequency of transactions complicates tracking and analysis, as the sheer number of transactions can overwhelm standard monitoring systems.
• Velocity: The rapid succession of payments, coupled with potential chargebacks or cancellations, creates a chaotic financial trail that is difficult to follow.
• Channels: Scammers predominantly use digital payment platforms, online banking, and occasionally cryptocurrencies to maintain anonymity and complicate tracing.
• Anonymity: There is often a mismatch between beneficiary details and the purported employer, signalling a red flag for transactions.
• Recurrence: Victims are frequently solicited for multiple payments under various pretexts, each justified as necessary for job commencement or continuation.
• High-risk Geos: Payments are directed to accounts in high-risk jurisdictions or to those that are otherwise unrelated or suspicious, lacking any logical connection to the job or employer.
• Geographical Inconsistencies: The involved countries often have no direct connection to the alleged job or employer, exploiting the complexities of international law and jurisdictional boundaries.

Harnessing Collective Efforts for Enhanced Security

The fight against transnational fraud is not a battle that can be won in isolation. It requires the concerted efforts of financial institutions, regulatory bodies, law enforcement, and the public. By adopting the typology provided by the AFC Ecosystem and vigilantly monitoring the detailed risk indicators, we can forge a path towards a more secure and resilient financial environment. This collective approach is our best defense against the sophisticated and ever-evolving landscape of global fraud.