Sumsub keeps getting questions from our followers about the specifics of regulatory compliance, verification, automated solutions, and everything in between. We’ve therefore decided to launch a bi-weekly Q&A series, where our legal, tech, and other experts answer your most frequently asked questions. Check out The Sumsuber and our social media every other Thursday for new answers, and don’t forget to ask about the things that interest you.
This week, our Senior Business Development Manager in China, Taiwan, Philippines, Chuan Wee Lye will talk about the current state of AI-driven transaction monitoring.
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How can we combat fraud networks in the Philippines?
Digital fraud is getting more complex and organized by day. One of the rising trends is the proliferation of fraud networks (also known as fraud rings). Our internal research shows that every 100th user of a digital platform or service globally was a member of a fraud ring in 2023. While fraud networks are also on the rise elsewhere, the Asia-Pacific (APAC) region should pay special attention to them, as the region is showing a striking 2.6% growth in fraud networks over the past year.
Our research shows that the Philippines has a relatively low number of fraud networks, comprising just 0.3% of the country’s users. By comparison, 10.2% of all users in Bangladesh are part of fraud networks. In Vietnam, that figure is 6.6%. In Singapore, it’s 2.8%. Most ‘leaders’ of fraud networks also come from the APAC region: Oman (7.2%), China (4.6%), Hong Kong (2.9%), and Indonesia (2.2%). Yet, the mild number of fraud networks doesn’t mean that this problem isn’t present. Companies still need to take actions to prevent it.
Let’s first quickly recap what fraud networks are. Fraud networks consist of multiple accounts, controlled by one or more fraudsters. They are typically more organized than individual fraudsters and pose a greater threat to businesses. There are different tactics fraud networks can use, including:
- Mules or Drops
- Stolen Accounts
- Deepfake Grids
- Bots and Incentivized Traffic
You can learn more about each scheme in our in-depth article here.
Now, when it comes to fighting fraud networks in the Philippines, it should be mentioned that the country is taking proactive steps in confronting the issue. For example, recently it passed the Anti-Financial Account Scamming Law aiming to confront the spread of financial crimes. Meanwhile, companies should remember that they need to use a holistic approach. This means that a simple Know Your Customer solution isn’t enough. As our research shows, more than 70% of fraud takes place after the initial verification. Therefore, companies should ensure the safety of their users throughout the entire customer journey.
This way a company can spot changes in behavioral patterns, as well as unusual transactions in a timely manner. The focus here should be on details. For example, if a company sees that several customers are using the same address at the verification stage or change their initial address to a different one, then this might be a sign of fraudulent activity taking place.
Other precautions include email and phone risk assessments, which can help root out fraud networks at an early stage. Another important step is to check for changes in customer behavior. Possible fraud network indicators can be a sudden change in IP address or abnormal transactions. To spot such activities on time, it’s essential to employ real-time monitoring, along with measures like biometric intelligence, device fingerprinting, and more.
Fraud is a complicated issue that includes a variety of threats from money muling to deepfakes. The APAC region is a target of many of such schemes, often organized not by individual fraudsters, but by fraud networks. To learn more about fraud in APAC and ways to fight it, check our complete guide here.
Chuan Wee Lye
Senior Business Development Manager in China, Taiwan, Philippines
