Geographic limits to commerce are vanishing as cross-border trade has become a breakout success story of the pandemic era. Next-generation eCommerce and app-commerce are enabling people all over the world to buy and ship goods with little global limitations.
This is wonderful news for consumers, sellers, manufacturers, shipping firms — and, sadly, cyberthieves. The cross-border trade boom is tantalizing to online criminals, who use advanced technology to create fake identities and fraudulent accounts. Using stolen credentials to pay for goods, cyberthieves are wreaking havoc on global money and merchandise movements.
The August 2021 AML/KYC Tracker, a PYMNTS and Trulioo collaboration, dives into the mounting cross-border transaction fraud, noting that “more than 50% of organizations in the United States and the United Kingdom that make cross-border payments now cite fraud as their biggest concern, in fact, with activities such as money laundering and terrorism financing cited as particularly prevalent issues.”
The situation is now prompting swifter action. Online marketplaces are moving to protect new revenue streams and enhance identity security in an effort to thwart cross-border cybercrime.
A surprising amount of work remains to be done on this front, as the August 2021 AML/KYC Tracker illustrates, stressing the vital role of identity security in safer cross-border transactions.
Good actors take action
Cross-border Know Your Customer (KYC) countermeasures are now being deployed in earnest as waves of online criminals exploit global eCommerce.
A perfect example of this, which is highlighted in the August 2021 AML/KYC Tracker, involves the announcement of four European payment providers — PayDo, Pollen Technologies, Sokin and XanderPay — who will be utilizing the biometrics and compliance technology suite from Trulioo GlobalGateway to meet increasingly stringent cross-border KYC prerequisites, while outsmarting criminals.
The situation is urgent, as PYMNTS notes, “digital fraud against consumers increased by almost 24% in the period from January to April 2021, compared to the period of September to December 2020.” Even so, 44% of consumers say they will continue ordering online and across borders, despite cybersecurity that is ineffectual (or nonexistent).
PYMNTS also covered remarks by U.S. Federal Reserve Chair Jerome Powell, who acknowledged ongoing cross-border identity and payments security issues earlier this year. “One of the keys to moving forward will be improving the existing system where we can, while also evaluating the potential of and the best uses for emerging technologies,” Powell said.
With up to 5% of global gross domestic product (GDP) believed to be laundered through digital financial networks — and under 1% of it caught — identity verification is taking the lead on protecting consumers and legitimate businesses from cross-border cybertheft.
Many organizations are still missing the mark on AML/KYC
By putting advanced solutions front and center, technology firms are empowering cross-border businesses with new and better tools to fight off online criminals, who also possess powerful technology.
Progress is being made, albeit slowly. The August AML/KYC Tracker states that, “ISO 20022, the international payment messaging standard, is embraced by a mere 70 countries around the world. Banks and politicians will have to help drive adoption and interoperability.”
Regulators must do their part, but implementation is ultimately a private sector task as players move to secure online identity and prevent cybercrime from hindering cross-border growth.
As identity verification is taken up by more companies for its proven effectiveness at lowering cybercrime, there are miles to go before cross-border transactions can be considered safe.
In one recent global survey, 73% of companies reported feeling “pressure to grow their bottom lines amid the pandemic.” Meanwhile, according to the August Tracker, “65% of respondents fell short on KYC compliance in response to the pressures felt, and less than 50% conducted formal customer or third-party due diligence checks at all.”
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