Transaction monitoring system to prevent financial fraud

CA inter

Due to the increase in the global volume of money transactions, money laundering methods are becoming more and more sophisticated. Financial institutions like banks, face significant challenges when it comes to monitoring AML. Financial technology companies worldwide invest $2 trillion annually in combating money laundering cases. However, the monitoring of financial transactions has become a viable element of anti-money laundering rules in recent years. Financial institutions have developed a transaction monitoring system to keep an eye on unusual transactions.

What is online payment fraud?

Online payment primarily refers to the electronic exchange of money. Online payment is the process of transferring funds from the customer’s credit card account to the selling company’s bank account. Online payment services are beneficial and preferred by those with technological advancement. It has many advantages, it also has the disadvantage of being used by cybercriminals as a potential target for fraudulent activity. In today’s world businesses need to protect themselves and their customers from these fraudulent crimes. What exactly is this online payment scam?

Any illegal online transaction by a cybercriminal is known as an online payment fraud. Online payment fraud can also be referred to as e-commerce payment fraud. More often after e-commerce platforms became so popular. People don’t have to spend too much time on what they buy through online payment services and very often they prefer it because of these opportunities. Cybercriminals use many methods to capture information that users enter while shopping on websites, such as credit card information. Businesses also need to take precautions against these scams to keep themselves and their customers safe and provide them with the best experience.

Types of online payment fraud

There are many ways to do online payment fraud which criminals use. With the development of technology, the types of use are increasing and evolving; Some of these options are:

Merchant identity fraud

Cybercriminals use this method to open a legitimate merchant account and collect stolen credit cards. When criminals do fraudulent transactions, they attempt to disappear before cardholders notice fraudulent payments and cancel transactions, in this case, the platform from which the payment was made, is responsible for any damage and any additional charges related to credit card chargebacks.


Bank accounts, credit cards, log-in details, emails that contain and require personal information, and websites are tools that criminals use for phishing. aside they don’t trust. If the websites appear unknown or unreliable, spoofing can occur.

Identity theft

One of the most common types of online fraud is identity theft. Cybercriminals can steal personal information from people unable to take action on online payment sites. Cybercriminals steal this information, especially from people who conduct transactions on firewalls, websites that use legacy security systems, and people who use public WiFi.

Know Your Customer (KYC) to Prevent Online Payment Fraud

AML and KYC procedures must be used in regulated sectors. Online payment service providers can also belong to regulated industries and can therefore implement these procedures. Know Your Customer also does business to identify customers and understand the risk they pose. Client Procedures (KYC)  are designed to prevent money laundering and provide real detailed information about the customer. KYC providers aim to do business with real customers and partners and protect against ML / FT risks. KYC takes place during customer purchases, at the beginning of the partnership, and at set time intervals to ensure that cybercriminals and scammers cannot even create an account. existing risks can change.

Implementing effective authentication solutions is the first step in the fight against payment fraud. For effective detection, the first requirement of companies is the perfect configuration of internal detection and due diligence procedures. Due diligence (CDD) is used to identify and take action on customer risks, and advanced due diligence (EDD) procedures are performed on riskier customers. For greater security, machine learning and behavioral analysis can be used in organizations, and with these technologies, organizations are in protecting against anti -Financial criminals way ahead.

AI-Based Transaction monitoring system

Financial institutions take a holistic and holistic view of the financial threat associated with each customer in order to combat emerging cases of financial crime. To counter criminal activity, financial institutions implement anti-money laundering (AML) and Know Your Customer (KYC) procedures both in advance and on a daily basis.

The central aim of the transaction monitoring system is to effectively identify and combat money laundering and terrorist financing. Financial firms should incorporate AI-powered mechanisms that dramatically improve the chances of identifying potential risks without placing a burden on their compliance teams.