Tackling faster payments fraud and AI-driven scams

 

• How are faster payments contributing to the rise of fraud in wealth management, particularly investment scams?
  
  
• Why is fraud growing at a faster rate than traditional financial assets, and what does this mean for wealth managers?
  
  
• How are AI-generated scams exploiting vulnerabilities in instant payment systems, and how can wealth managers address these risks?
  
  
• What key strategies and technologies can wealth management firms implement to prevent fraud, such as step-up verification and secure communication?
  
  
• How can collaboration and data sharing across the industry help wealth managers identify and prevent emerging fraud threats?
  
  

 

The rise of faster payments has introduced significant speed advantages, yet fraud rates have increased by 25% YOY according to the Federal Trade Commission, with investment scams at the forefront of this growing problem. These scams capitalise on the speed at which funds can now be transferred, often allowing fraudsters to act quickly before any verification or detection can occur.

Fraud in wealth management is now growing at a pace that exceeds that of traditional financial assets. As wealth management firms increasingly adopt digital tools to facilitate faster transactions and investment opportunities, they also face a growing threat from sophisticated scammers.

This type of fraud is evolving more rapidly than the industry’s own growth can match, making it harder to safeguard clients’ assets. Wealth managers must identify and respond to this trend, with clear understanding of how scams have shifted from ‘known’ forms of fraud to complex, highly-targeted schemes that are harder to detect.

A new and dangerous threat to the wealth management (field or industry) is the rise of AI-generated scams utilising instant payments functionality. These AI-driven fraud attempts are capable of adapting quickly to changes in technology, enabling scammers to exploit weaknesses in payment systems and practices that lack sufficient fraud controls. Without suitable verification systems in place, these scams risk becoming an everpresent hazard to both clients and wealth managers.

While ‘traditional’ solutions to combat fraud in wealth management are well established, the industry suffers from a lack of coordination in implementing them effectively across institutions and geographic regions. Wealth management firms must integrate a combination of strategies, including user interface improvements, enhanced identity and transaction verification processes, and mandatory cool-down periods to reduce the pressure on clients and money management providers during high-stakes interactions and scenarios.

Sign up for this Finextra Wealth Continuum Series webinar, to join our panel of industry experts who will explore how faster payments are contributing to the rise of fraud in wealth management.