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AI Financial Crime Activity on the Rise

More than half of banks lost between $5 million and $25 million to AI-based crime last year

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  • Written by  Banking Exchange staff
 
 
AI Financial Crime Activity on the Rise

AI is the foremost emerging threat for banks and financial institutions, despite increased investment to leverage AI as a tool to combat financial crime, according to BioCatch.

The 2024 AI, Fraud and Financial Crime survey revealed 69% of banks believe criminals are more advanced at using AI for financial crime than banks are at using AI to fight financial crime.

AI has enabled criminals to take more sophisticated approaches to financial crime, such as the use of synthetic identities, which 72% of organizations faced when onboarding new clients.

As a result, 91% of financial services or banking organizations are rethinking the use of voice verification due to the risks of voice cloning with AI.

The rise in AI-based financial crime caused more than half (51%) of organizations to lose between $5 million and $25 million in total to AI-based or AI-driven threats in 2023.

Despite the increased risks of AI, 69% of organizations believe AI will lead to more revenue than loss. For example, money from improved customer interactions will outweigh money lost from fraud and breaches.

The report also found that more banking organizations are using AI to combat crime, as 74% and 73% of banks and financial institutions, respectively, are using AI to detect financial crime and fraud.

In addition, 94% of organizations are using AI techniques to detect risk from user behavior.

Meanwhile, 87% of respondents reported AI has increased the speed with which their organization responds to potential threats.

Even though financial institutions are already using AI for financial crime detection and fraud detection, 56% of fraud management, AML professionals and risk and compliance leaders reported an increase in financial crime activity in 2023.

This trend is set to continue as 46% expect financial crime to increase in 2024 and 43% anticipate a rise in fraud activity volume in 2024.

According to the report, this suggests that despite continued investment in technologies and resources to combat financial crime and fraud, threat actors are finding ways to circumvent these prevention measures.

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