Trade Companies Query: How to Combat Fraud while Retaining Customers?
In the ever-evolving world of trading, combating fraud while retaining customers is a constant challenge. This week, Pati Murtazalieva, VP of Global Sales Operations at Sumsub, took the stage for a focused Q&A session on this very topic. The discussion, part of Sumsub's bi-weekly Q&A series, addressed the pressing concerns of trading companies as they navigate both existing and emerging markets.
The series, which airs every other Thursday on The Sumsuber and social media platforms Instagram and LinkedIn, brings together experts from legal, tech, and other fields to address frequently asked questions about regulatory compliance and verification. This week's session was no exception, delving into the best practices for fraud prevention without compromising the user experience.
Trading companies are expected to face a staggering $362 billion in losses from online payment fraud globally between 2023 and 28. To counter this, companies must have robust measures in place to combat fraud without losing customers. Here are some of the key strategies discussed during the Q&A session:
- Integrating multiple fraud prevention tools into a unified platform: By combining blockchain intelligence, identity verification, and behavioural fraud detection, companies can comprehensively assess risk and prevent fraudulent activity effectively before onboarding users or during transactions.
- Using risk-based digital profiling and device intelligence: Advanced pre-screening methods relying on digital profiles and device data help identify and block bad actors early without causing friction to legitimate customers.
- Adhering to payment compliance regulations: Following global AML (Anti-Money Laundering) and KYC (Know Your Customer) standards, such as the EU’s AML directives and U.S. FinCEN requirements, ensures legal operation and builds customer trust by reducing fraud risk.
- Implementing transaction monitoring: Real-time or post-transaction analysis detects suspicious behaviour, allowing swift response to emerging threats while maintaining smooth processing for genuine users.
By employing these practices, trading companies can strike a balance between effective fraud prevention and a positive user experience, thereby safeguarding their business and retaining customers.
The discussion also emphasised the importance of identifying the nature of customers, particularly high-net-worth individuals and institutional investors, and assessing the risk level for all associated legal entities. Moreover, it stressed the need for rigorous Know Your Customer (KYC) procedures and staying at the forefront of security by incorporating innovative anti-fraud technologies.
The trading industry, heavily regulated due to its high risk of fraud, money laundering, and terrorist financing, benefits greatly from such discussions. Audience members are encouraged to submit their own questions through Instagram and LinkedIn for future sessions. As the world of trading continues to evolve, these best practices will undoubtedly prove invaluable in the fight against fraud.
- In the busy realm of trading, it's essential for companies to implement technologies that integrate multiple fraud prevention tools into a unified platform, such as blockchain intelligence, identity verification, and behavioral fraud detection, to maintain both regulatory compliance and a seamless user experience.
- As trading companies navigate various markets and combat the escalating threats of fraud, the implementation of strategies like risk-based digital profiling and device intelligence, adherence to payment compliance regulations, and transaction monitoring will help them strike a balance between effective fraud prevention and a positive user experience, thereby safeguarding their businesses and customer base.
