Combating Financial Crime in Asia

In this informative page, we provide insights and data on key regional markets, including the international financial centers of Hong Kong and Singapore, as well as Indonesia, Malaysia, Thailand, the Philippines, Vietnam, Cambodia, Laos and Myanmar. We do not touch upon Mainland China, Korea, India or Japan. Our research has been greatly assisted by interviews with experts on financial crime and risk management working across the region. With their assistance, we offer examples of the key types of financial crime and fraud that banks in these markets are facing and then set out the case for a technology-led approach to improving operational risk management and compliance. Technology systems that employ advanced, real-time data analytics offer clear advantages over established risk-management practices based on manual processes, re-keying and the use of Excel spreadsheets. There are some technology-based solutions that are less sophisticated, but they bring with them the risk of triggering large numbers of false positive alerts that risk swamping the organization’s capacity to respond. By incorporating machine-learning techniques into the data analysis system, its predictive performance can be improved, increasing its accuracy and reducing the proportion of costly false positives. This allows a more efficient use of risk-management and compliance resources, helping the bank to satisfy the demands of its regulators and underpin its security and profitability.

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Executive Summary

Banks and wealth managers are under growing pressure to combat financial crime, including money laundering, bribery and corruption, sanctions violations and fraud. However, they face a range of challenges in improving their ability to detect and prevent these crimes, including varying approaches by national financial regulators and shortages of key compliance and riskmanagement skills that drive up costs and force institutions to hire external consultants.

At the same time, the banking markets across the Asian countries considered in this paper are undergoing a very rapid transition to digital and especially mobile channels, often largely bypassing intermediate stages such as internet banking.

This naturally increases the pressure on banks to develop and launch improved digital services as quickly as possible.

In markets where consumers often have a poor understanding of how to ensure their online information stays secure, the rush to scale digital services can create serious security vulnerabilities that let in financial criminals and fraudsters. Where corporate cultures are weak and social acceptance of bribery and kickbacks is widespread, these vulnerabilities become even more troubling.

In this informative page, we provide insights and data on key regional markets, including the international financial centers of Hong Kong and Singapore, as well as Indonesia, Malaysia, Thailand, the Philippines, Vietnam, Cambodia, Laos and Myanmar. We do not touch upon Mainland China, Korea, India or Japan. Our research has been greatly assisted by interviews with experts on financial crime and risk management working across the region. With their assistance, we offer examples of the key types of financial crime and fraud that banks in these markets are facing and then set out the case for a technology-led approach to improving operational risk management and compliance. Technology systems that employ advanced, real-time data analytics offer clear advantages over established risk-management practices based on manual processes, re-keying and the use of Excel spreadsheets. There are some technology-based solutions that are less sophisticated, but they bring with them the risk of triggering large numbers of false positive alerts that risk swamping the organization’s capacity to respond. By incorporating machine-learning techniques into the data analysis system, its predictive performance can be improved, increasing its accuracy and reducing the proportion of costly false positives. This allows a more efficient use of risk-management and compliance resources, helping the bank to satisfy the demands of its regulators and underpin its security and profitability.


This region is vast and rapidly evolving, but it is characterized by extremes: advanced economies sit alongside those that are still developing; levels of wealth and income vary enormously; and

access to the formal financial system is growing fast but far from universal. However, the direction of development across these markets is unmistakable: urbanization, industrialization and trade are helping to raise per-capita gross domestic product (GDP), creating a growing middle class across the region.

The expanding incomes of the millions of households who are joining the region’s middle class are powering the growth of financial and banking services. Millions of people are becoming first-time customers of banks, insurers and asset managers.

At the same time, adoption of digital and especially mobile technologies across the region has been extremely quick, and in terms of the number of mobile connections relative to the population, South-East Asia is among the world’s leaders at 141 percent, well ahead of Western Europe and the Americas. As a result, pressure to provide financial services through digital and mobile channels is intense in South-East Asian markets.

Given the wide differences between the countries of this region in economic terms, it naturally follows that their financial systems will show similar diversity. At one end of the spectrum, Singapore and Hong Kong are well-developed markets seeking recognition as global financial centers that attract large numbers of international professionals and significant cross-border financial flows. Beyond these centers, the region comprises a larger group of financial services markets dominated by domestically focused institutions that show varying degrees of maturity.

But irrespective of each country’s level of financial maturity, the expansion of banking and financial services across the region, and the dominance of digital and mobile banking means that institutions are becoming increasingly vulnerable to financial crime and fraud.

You may be interested in reading our blog post to understand why combating mobile fraud in Asia is key.


We are grateful to the following interviewees for sharing their insights, and to other financial crime experts we spoke to who cannot be identified in this paper.

Scott Bales

Managing Director of the advisory firm Innovation Labs Asia, author of the forthcoming book Innovation Wars and a widely recognized expert on digitalization in financial services. Previously Chief Mobile Officer of Moven, the digital bank.

Saman Wijaya Bandara

Partner and Head of Insurance, Forensics, IT Risks and Analytics at EY Vietnam, and Global Ambassador for the Institute of Risk Management.

Michael Araneta

Associate Vice-President, IDC Financial Insights, and leader of the company’s research and consultancy practice on Asia-Pacific financial services.

Key Financial Crime and Banking Fraud Challenges in South-East Asian Markets

The challenges that financial crime and banking fraud present to institutions and their regulators vary greatly, as you would expect in a region as huge, diverse and rapidly developing as South-East Asia.


Regulatory frameworks for financial services vary widely across these markets. According to risk-management professionals based in the region, financial authorities in Singapore and Hong Kong have the most developed and comprehensive rules, which are updated regularly with reference to leading global regulators. Sources in global institutions say that their organizations encounter more pressure from regulators in their home markets, especially the US, to adopt the best technology and processes to combat financial crime than they experience from local regulators in most Asian markets. “That [pressure from home] cascades down to all regions,” said one interviewee. However, given how global and interconnected the financial industry has become, it is to be expected that pressure to improve defences against financial crime will increase from all directions in future.

Regulators have increased their focus on anti-money laundering (AML) measures since allegations of embezzlement from Malaysia’s 1MDB sovereign wealth fund came to light through media reports in 2015. The following year, both Singapore and Hong Kong set up inspection and enforcement teams to increase their oversight of AML regimes in financial institutions. “But Taiwan has only recently updated its AML rules to include some basic elements that are well established in other centers,” one expert commented.


Hiring experienced compliance and riskmanagement staff, even in the region’s main financial centers, is difficult and expensive, placing major pressures on the cost base

Interviews with experts across the region suggest that differing approaches and speeds of development of financial regulation across the region result in a patchwork of local rules that vary widely. Saman Wijaya Bandara, Partner in EY Vietnam, and Global Ambassador for Vietnam, Cambodia and Laos for the Institute of Risk Management, says that in Vietnam, for example, regulators have produced credit and market risk models but provide extremely limited guidance on how banks should manage operational risk. “It’s up to every bank to decide what they should be doing, whether to have a fraud monitoring system that can monitor transactions electronically. It all depends on their digital agenda,” he says.

As a result, banks and financial institutions have widely varied levels of readiness and sophistication in their systems to detect and prevent financial crime and fraud. With a few exceptions, only multinational banks across the region are using automated systems to detect suspect transactions. The great majority of local institutions rely on manual, Excel and paperbased approaches that are slow and inefficient.

Fragmentation between different regimes across this huge region presents a major challenge; financial crime and money laundering operate seamlessly across borders, while governments and national regulators individually see only small pieces of the picture.

Skills Shortages

As banks expand to meet the growing demands of both customers and regulators, their headcounts often expand quickly, and they run into major skills shortages in specialist areas such as compliance and risk management.

“Talent is a big challenge,” says a senior risk-management professional. Hiring experienced compliance and riskmanagement staff, even in the region’s main financial centers, is difficult and expensive, placing major pressures on the cost base. There is widespread use of consultants to reinforce in-house resources. Rising salaries are attracting more people towards this area, but “we’re not yet at a critical mass where we can say there’s a good supply of people available that we can easily source from.”

In May 2018, Bill Winters, Chief Executive of the Asia focused multinational bank Standard Chartered, wrote in the Financial Times that since 2012, his bank’s spending on financial-crime compliance had increased almost tenfold, and its headcount in this area gone up sevenfold.

Transition to Online and Mobile Banking

As already noted, this region has one of the world’s highest rates of mobile connectivity and its financial-services markets have seen a very rapid transition to online and mobile banking over the past few years. Asian Banker reports that in markets such as Indonesia and Vietnam, where there are large underserved populations and limited access to bank branches, digital-only banking has gained traction as consumers “leapfrog” conventional channels and move straight to online services.

Mass adoption of smartphones has been another major factor. In most markets, it remains that more transactions are conducted by computers than mobile devices, but mobile banking is growing significantly faster, according to Asian Banker. “Mobile is set to become the dominant banking channel for consumers to interact with their banks,” the publication says.

The transition to mobile is happening at different rates across the region. In Thailand, mobile banking transactions over took those via the internet in the first half of 2015, and the number of mobile banking users rocketed from 1.2m in 2013 to 20.9m in 2016. In Malaysia, online banking is still the dominant digital channel, but the number of mobile users has recently been growing twice as quickly, at 27 percent vs 13 percent for online. Leading Malaysian bank CIMB reported that 94 percent of its banking transactions in 2016 were digital.

Banks are therefore under intense pressure to meet consumer demand for online and mobile banking services and maintain their share of this fast-growing part of the financial-services market. The risk is that the pressure to bring mobile products to market is likely to result in them launching applications and services that have security loopholes. “It’s a chase for numbers and growth regardless of whatever gaps they might be seeing in the background,” says a banking technology expert based in the region. “A lot of the gaps are happening because the banks have invested very rapidly in their mobile channels without thinking so much about security.

It’s not baked into new applications that need to be launched very quickly.” The risk is that, as part of the land grab among banks in mobile, opportunities will multiply for criminals to target bank customers.

Learn more: Read our blog post on “Mobile Banking: How to Protect Customers and Prevent Fraud?

Poor Public Understanding of Online Security

Many consumers across the region have a poor understanding of online security that can leave them vulnerable to fraudsters, for example by downloading mobile games that include viruses, malware or security vulnerabilities. Vietnamese authorities suggest that almost three-quarters of the mobile devices in the country are infected with viruses, largely due to low awareness of cybersecurity risks. Security experts we spoke to expressed particular concern about weaknesses in mobile devices running older operating systems.

The rapid transition to digital channels for e-commerce and banking, in which countries have largely bypassed certain stages of technology development, has left consumers increasingly vulnerable to criminals, according to a 2017 cybersecurity report by consultants Oliver Wyman. “Over the past few years many people across several Asian countries have leapfrogged from not having any internet access at home to owning multiple mobile devices and accessing the internet,” the report found.

“For example, estimates from the World Bank indicate 22 percent of Myanmar is now online, compared to less than 2 percent in 2013… Unfortunately, there remains a huge gap in cybercrime legislation in these countries – the lack of awareness and knowledge of basic security makes most online transactions highly susceptible to digital theft.”

Scott Bales, Managing Director of consultancy Innovation Labs Asia, and author of the forthcoming book Innovation Wars, argues that the issue of poor public cybersecurity awareness is so serious that tests to establish how well consumers understand how to keep themselves secure online could even become part of the Know Your Customer regime that banks and financial institutions are obliged to use, especially in relation to how customers’ responsibilities and liabilities are explained to them.

Weak Corporate Cultures and Prevalence of Bribery

Although the picture varies across the region, widespread social acceptance of bribery and kickbacks as normal practice, and a failure in some organizations to set a strong compliance culture from the top, increase the risk of losses from financial crime and fraud.

According to EY’s cross-sector 2017 Asia-Pacific Fraud Survey, 63 percent of respondents agree that “bribery or corrupt practices happen widely in my country,” while 49 percent say their senior management would ignore unethical behavior to achieve revenue targets. Although the survey finds that the proportion of organizations introducing codes of conduct and anti-bribery and corruption policies increased rapidly between 2013 and 2017, an inconsistent approach to compliance means these efforts are not “translating into more ethical conduct.”

Relatively low wages among many junior employees exacerbate the risks from fraud and financial crime, says Scott Bales of Innovation Labs Asia, because they enable “incentivized internal fraud” in which organized gangs induce staff to collude. Among tellers and service staff, says Bales, a US$100 bribe could represent as much as half their monthly wage.

Saman Wijaya Bandara, Partner at EY in Vietnam, says: “It’s due to the business culture. People look for win-win situations, but what they mean by win-win is that when you do something in a certain capacity then you must also receive something. And then naturally giving bribes or receiving kickbacks is a normal part of business. It’s not really seen as a crime or a problem.

“When the process is weak, the tone from the top and the regulation are not strong, and there are a lot of opportunities people will take them and they won’t think ‘this is the wrong thing to do’ because everybody is doing it.” He also highlights major corporate weaknesses in the detection of financial crime and in enforcement: “They have teams that are responsible for internal investigations, but when you look at them they’re not experienced. People have the title, but either they don’t have the authority to investigate or they don’t have the capability.” Trust in corporate whistleblowing hotlines is low, with many refusing to use them because they don’t believe they will be protected if they do. “Only 37 percent of respondents have confidence that a report to the company’s whistleblowing hotline will always be followed up,” EY’s 2017 Asia-Pacific Fraud Survey found.

Major Areas of Concern and Vulnerability for Banks


The number, variety and sophistication of cyberattacks ‘have all increased exponentially’ over the past two years, according to EY


Following the revelation of alleged embezzlement from Malaysia’s state-owned 1MDB investment fund, financial regulators in South-East Asia have greatly increased their focus on banks’ anti-money laundering systems, as well as on measures to detect and prevent terrorist financing. In June 2016, the Monetary Authority of Singapore announced dedicated departments to tackle money laundering and enforcement, while in May 2017, the Hong Kong Monetary Authority partnered with banks in the territory to form the Fraud and Money Laundering Intelligence Task Force. In May 2018, Singapore’s Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP) increased its drive against money laundering with the publication of a series of best-practice papers for financial institutions, aiming to reinforce defences against trade-based money laundering and the misuse of company structures for illicit purposes. The initiative sits alongside an ACIP working group on the use of data analytics to improve detection of suspicious client profiles, activities or transaction patterns, and to identify areas where closer collaboration between industry and government would be beneficial. As AML regulations have been tightened, banks have been required to perform more rigorous due diligence on both customers and customers’ customers, including obtaining disclosures of beneficial ownership.

The regulators’ increasingly aggressive approach to AML has highlighted weaknesses in banks’ existing supervision and surveillance functions, requiring much stronger internal controls and improvements to their transaction monitoring systems to reduce the high incidences of false positives, which push up the headcount and compliance and risk-management costs. Tighter AML regimes have placed huge additional burdens on banks in recent years, requiring big increases in spending to combat increasingly sophisticated money laundering techniques. International money laundering syndicates now provide “laundering as a service” to criminal organizations, renting access to accounts through which funds can be moved by the hour.


As financial services digitalize, transaction volumes increase enormously, and new points of vulnerability emerge in banks’ systems and processes. As a result, the number, variety and sophistication of cyber-attacks “have all increased exponentially” over the past two years, according to EY’s Asia-Pacific Fraud Survey 2017. At the same time, poor awareness among staff and customers of cybersecurity best practices increase the risk of breaches, for example due to the widespread habit of using personal devices for work-related activities. The chief areas of concern include:

  • Phishing This is the biggest single problem across the region, says Scott Bales of Innovation Labs Asia, and although based on email scams it can also involve fake call-centers. These have been used to execute so-called ‘man in the middle’ social-engineering scams in which a telephone caller persuades the account holder to request a one-time password that is then used to gain illicit access to the customer’s account.
  • Fake identities Social-engineering techniques, including harvesting personal data from poorly protected social-media accounts, as well as stolen personal information that is sold on the dark web, are used to create synthetic identities for use in fraudulent finance applications.
  • Mobile apps and games Bank customers who download apps and mobile games that contain security loopholes or malware have their banking credentials stolen, allowing criminals to access their accounts.
  • SWIFT security Concerns over the global inter-bank messaging system increased after the breach at the Bangladesh Central Bank in February 2016, when hackers were able to create false SWIFT messages requesting withdrawals worth US$1bn from the Federal Reserve Bank of New York. Although most of the transfer requests were flagged for verification, $101m was sent to accounts in Sri Lanka and the Philippines. More than $60m is still unrecovered. Then in October 2017, criminals compromised the SWIFT system at NIC Asia Bank in Nepal and issued transfer requests for about $4.5m, most of which was recovered. In April 2018, the Malaysian Central Bank said it had prevented a similar attack.

Cyber-attacks can go undiscovered for months. An investigation of unauthorized access to online trading accounts at a global bank turned up user-access anomalies dating back more than a year before the hacking was detected, according to EY.

Fraud and Collusion

Fraud is a major problem for banks across the region, with interviewees for this paper indicating that collusion by bank insiders is by far the biggest area of concern. The prevalence of internal fraud and collusion is fuelled by relatively low wages among many junior bank employees that make them vulnerable even to modest inducements, as well as widespread acceptance of bribery and kickbacks as normal business practice.

However, internal fraud is not restricted to junior staff.

In July 2017, Maria Victoria Lopez, a vice-president in the corporate banking department of Metrobank, the Philippines’ second-largest bank, was charged with attempting to steal P1.75bn (US$33.3m) by creating fake loans from one of the bank’s corporate customers to her.

The major threats from internal fraud include thefts from customer accounts, fraudulent card applications – in regional surveys banks report that between 5 percent and 10 percent of all card applications are fake – and fraudulent loan approvals that result in high levels of non-performing loans (NPLs) on bank balance sheets.

In 2017, the Vietnamese central bank said NPLs at commercial banks and the Vietnam Asset Management Company could be close to 9 percent, and pledged to cut that to less than 3 percent by 2020.

Arguably the biggest problem that banks face in tackling financial crime and fraud is the huge proportion of false positives that their monitoring and detection processes generate – up to 99% of alerts fall into this category, according to some market participants.

The inefficiency and inaccuracy of banks’ existing monitoring systems mean that these activities are extremely costly to run, and waste the time of skilled and expensive staff, who are unable to identify and concentrate on the cases that require their expertise. Optimizing transaction monitoring to reduce the extremely high proportion of false positives is therefore a key priority.


Current monitoring processes generate huge numbers of false positives - up to 99% of alerts fall into this category, according to some market participants

The Challenge of False Positives

Factors leading to high levels of false positives:

Advanced Data Analytics: The Next Frontier in the Fight Against Financial Crime and Fraud

Faced with growing pressure to become more efficient in detecting and preventing financial crime and fraud, banks across the region need to seize the opportunity that new technology offers to meet two key objectives:

In its 2017 report, From Suspicion to Action, Europol concluded: “The increasing digitalization of financial services results in growing volumes of transactions and extremely large data sets requiring computational analysis to reveal patterns, trends, and associations. The use of analytics is therefore becoming essential for both reporting entities and Financial Intelligence Units to cope with information and fully exploit its potential.”

Regulators in the region are increasing their emphasis on advanced data analytics as a key means of detecting and disrupting illicit activity in the financial system. In Singapore, the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership, has launched a data analytics working group to leverage the collective experience of its members in using AML/CFT data analytics to improve the detection of suspicious client profiles, activities or transaction patterns. Banks in South-East Asia are also well aware of the essential role that technology will play in combating financial crime and fraud in an increasingly digital industry, but they are some way away from harnessing its full potential.

A senior risk manager based in the region argues that investment in technology is the only credible way to address the continuing cost inflation in risk management and compliance caused by huge volumes of false positives coupled with widespread skills shortages. “The cost of compliance keeps going up. That’s a big challenge and it’s where technology plays such an important part, because if you get it right you can make sure you can deal with the increasing pressure from the regulator without increasing your costs in line.”

This is not to suggest that banks in this region are failing to invest in technology. According to intelligence from IDC Financial Insights, they are increasing their IT investment at 7 percent a year, with security spending among the fastest-growing segments. Annual growth rates of 20 percent are normal for security-related IT spending, although Michael Araneta of IDC questions whether all of this investment is genuinely related to security.

“It often gets approval faster if it’s badged as security-related,” he says. Much of the banks’ outlay is driven by regulators; compliance accounts for about a quarter of the average institution’s IT-related spending, he adds

However, interviewees suggest that much investment is tactical – intended to address an immediate concern raised by regulators – rather than strategic. Banks face a relentless flow of regulatory changes, while most outside the major regional centers rely on older, more heavily manual techniques and Excel-based processes for controls and detection. Unless banks take a strategic decision to invest in the most advanced technology to combat problems such as fraud and money laundering, they are likely to continue generating high rates of false positives that will inflate their cost base and reduce their efficiency.

The Key Benefits of Moving to Advanced Data-Analytics Systems

Advanced technology tools offer a series of major advantages over traditional, manual processes:


Automation allows suspicious transactions to be detected in real time and blocked as they pass through the bank’s systems, enabling staff to check and validate them before they are cleared.

360-degree surveillance

Advanced data analytics enable banks to monitor both customers and their own staff through a single system and dashboard, helping to defend the bank against more complex frauds that involve both internal and external actors.


A technology-based approach allows the bank to monitor every transaction in its system – an impossible task for humans.

Focus on the individual customer

Data analytics enable each customer to be profiled, using that individual’s established patterns of behavior, so that every transaction can be assessed against that profile to highlight any anomalies that could indicate criminal activity.

Augmented Intelligence

The latest generation of technology systems allow banks to combine the power of Machine Learning with the expertise and judgment of human intelligence to produce the most effective tools against financial crime and fraud. These systems provide the crucial contextual information that allows human users to operate far more effectively than they could on their own.

Risk sensitivity

Even genuine customers sometimes carry out transactions that are outside their normal pattern of behavior. Advanced fraud detection systems use Artificial Intelligence to improve their ability to evaluate the risk of any transaction using a range of variables. This helps them to avoid blocking legitimate transactions and to identify others that are apparently genuine but have suspect characteristics.


False positive alerts hugely reduce efficiency by absorbing the time of expert staff, who are an expensive and scarce resource. With advanced technology systems as their first line of defense, banks can generate significantly fewer false positives and therefore allow their employees to focus on the genuine cases that require their attention.


Regulators demand comprehensive records to prove that banks have effective measures in place to combat fraud and can demonstrate they are investigating cases thoroughly. Automated fraud detection systems produce full audit trails and facilitate proper record-keeping, helping the bank comply with regulatory requirements.

The video below explains how AI helps financial institutions to prevent banking fraud.

Main Features of an Advanced Behavioral Data-Analytics Solution

At the heart of an advanced technology solution based on data analytics is a risk model that incorporates a detailed behavioral profile of each customer, coupled with a range of other variables, to create a template against which every transaction that takes place on their accounts can be compared and evaluated automatically. These risk models increasingly use Machine Learning techniques to improve their sensitivity and ability to differentiate between legitimate transactions and frauds.

The system takes every customer’s transaction history and builds a detailed profile based on their banking behavior – where and when they normally transact, their normal range of counterparties, the ways they typically access the bank’s systems and the usual size of transactions. This technique is applied both to individual customers and to institutional accounts that have multiple authorized users. The profile that the system creates becomes part of the template against which every future digital banking transaction is correlated to assess whether it matches the customer’s established patterns of behavior.

This behavioral information is augmented with a wide range of contextual information covering important variables: the customer’s geolocation, the time of the day, week and month, the device, web browser and type of webpage that is being viewed, the type of account involved (individual or institutional, for example), the domestic or international destination of any payments, whether the payee is new or previously known, and so on.


NetGuardians’ Machine Learning based risk system improves the detection rate of genuine frauds

When individual transactions are assessed against the risk model, it scores them against multiple risk factors, generating a probability that they are illicit. Transactions that score above a pre-determined threshold are flagged as alerts.

The most advanced systems improve the accuracy of their statistical risk models by using Machine Learning techniques to weight the scores that the statistical models generate more accurately and so reduce the proportion of false positives that otherwise risk overwhelming banks’ compliance functions.

Importantly, where some anti-fraud systems analyze transactions by size alone, flagging everything above a certain value, advanced systems draw on a much wider range of contextual information to focus the search, reducing the number of false positives.

The effectiveness of technology-based anti-fraud systems depends crucially on their ability to operate in real time, so that suspect activity can be flagged immediately and transactions blocked. Most anti-fraud systems that employ advanced analytics, incorporating detailed user profiles, cannot operate in real time and therefore risk failing to detect fraudulent activity quickly enough to prevent losses. However, the most advanced systems are able to handle huge volumes of transactions in real time.

The core objective should be to invest in the most advanced financial technology in order to generate the most accurate information possible from banks’ detection systems.

Case Study:

How NetGuardians’ Machine Learning-based system reduces false positives

This study used 12 months of payment transaction data at a retail bank, comprising more than 10 million transactions through both digital and non-digital channels, to compare the effectiveness of NetGuardians’ Machine Learning-based risk system with the rule-based control environment previously implemented by the bank.

The results showed that the NetGuardians system significantly reduced the number of false positives that bank staff had to manage every day, cut operational costs, and improved the detection rate of genuine frauds. This resulted in fewer transactions being blocked, improving the customer experience while enhancing the level of protection.

In addition, because the system was able to analyze every transaction, instead of the limited rule-based data set, it detected new types of fraud that had previously gone undiscovered by the bank.


Pressure from regulators across the region to improve operational risk management and the detection of financial crime can be expected to increase significantly over the next few years. There is already a major focus on AML and measures to counter terrorist financing, and greater emphasis on anti-fraud measures is very likely. Growing regulatory pressure, coupled with the continuing rapid shift to digital channels, will mean that institutions must expect the volume of transactions they must monitor to grow significantly. Given the very high percentages of false positives their current monitoring efforts generate – and the huge costs associated with processing these alerts – investments in the most sophisticated anti-fraud systems that harness Machine Learning techniques to improve the accuracy of their results offer by far the most efficient and effective way for banks to respond.

If you are interested in taking those information with you: