Client Portal overview

Combating Fraud When Onboarding Clients

January 11, 2022
Key takeaways:
  • Banking frauds and scams are best prevented before they can even begin at onboarding.
  • An arsenal of digital tools is required to keep up with the pace of bad actors who are also using technology to their advantage.
  • HelloFlow's library of services actively sniffs out, prevent, and report fraudulent activity.

As technology continually makes impressive leaps and bounds, unfortunately, so does the ability of fraudsters to attack banks and deceive financial institutes. It's an unfortunate rivalry that seemingly has no end. The most common form of fraud today is still identity theft, with more than 406,000 people in the US reporting that someone submitted a fraudulent government document under their name.

Fraud can wreak havoc on everyday people and financial institutions, so banks must adhere to exhaustive regulations to prevent these issues from happening. On top of that, banks also have a moral obligation to keep scammers at bay. This is why digital onboarding risk prevention is so pivotal in the fight against fraud. It's the difference between stopping scammers before they can even begin abusing the system and bad actors taking advantage of weak spots. By implementing a secure, timely, and thorough onboarding flow, you can catch any red flags swiftly while still keeping customers safe and happy.

What Type of Fraud Do Businesses Face?

There are several different types of fraudulent schemes a financial institution can encounter. Here are a few of the most common:

First Party Fraud - This type of fraud is committed by a prospect who requires your services. They may see it as only a little white lie. However, they misrepresent their identity or personal information by forging documents during onboarding to access more attractive packages like credit cards or mortgages. This form of fraud can also entail acquiring a credit card or loan by 'honest' means without ever intending to pay it back.

Identity Theft - This kind of scam is rampant around the world. It involves a fraudster impersonating a client to dupe the system. Most often, the criminal will take victims' assets or make unauthorized transactions. This type of fraud doesn't just exclusively occur after onboarding. Without a detection system, you face the risk of onboarding a stolen identity.

Synthetic Identity Fraud - This type of fraud is now on the rise; synthetic identity fraud involves creating vaguely new identities based on information gathered via a data breach. Scammers create an identity that straddles the line between fact and fiction, using both accurate and fictitious information.

Money Laundering - Laundering money refers to hiding the illegal origins of illicit profits, ultimately masking its source and making it appear legitimate. These schemes are often layered, so governments have required banks to adhere to AML regulations since the 1970s. On top of mandated compliance, further precautions can be taken for digital onboarding risk prevention.

Chargeback Fraud - Sometimes referred to as 'Friendly Fraud', it began with the rise of online shopping and digital transactions, whereby a customer will purchase an item, then request a chargeback after the item or service was received, leaving the merchant out of pocket.

A table displaying login menu
Database breach is a popular source of synthetic identities that fraudsters use to deceive institutions.

Preventing Fraud Using All Available Tools

When it comes to minimizing the risk of fraud, it only makes sense to use all the tools at your disposal. That requires an ecosystem of mechanisms to verify a person's intentions, identity, and assets as best as possible, leaving no stone unturned.

There are many digital tools available that can help you assess prospects accurately. It should first begin with the basics by using local ID verification to ensure the validity of an ID, passport, or driver's license. Before then verifying a prospect’s phone number, email, IP address, and billing information for further clarity. This process can also include more stringent tactics involving advanced identity verifications like facial recognition, biometric identification, and digital tampering verification.

Practices like KYC & AML checks are also pivotal. They should be conducted regularly even after onboarding a client to monitor key identifiers and ensure everything is above board. The use of automation for such checks can allow a hands-off approach to this while still keeping an eye on the ball. Some institutions may even examine a prospect’s device history for any suspicious markers, continually crosscheck blacklists for bad actors and utilize risk assessment tools to create risk models for better client handling.

How HelloFlow's Client Onboarding Can Help Businesses Minimize Fraud

HelloFlow is equipped with many of the most comprehensive tools available to fight fraud, including services like World Watch Plus, Onfido, NEMID, GBG, Twilio, and more. We are continually pivoting and adjusting the way we approach fraud as bad actors continue to try and find loopholes within banking. This includes integrating new AML services frequently, like Comply Advantage, into our already comprehensive suite of AML solutions.

When it comes to digital onboarding risk prevention, we're big believers in choice, which is why HelloFlow allows you to choose which tools suit you best and integrate them into your onboarding flow with a simple click of a button. HelloFlow also helps identify, assess, prevent, monitor, and report red flags automatically, making it more secure for everyone involved.

We are embracing digital tools to keep up with the changing pace of the world. The good news is, if you do feel safer in the hands of people, these processes can also be supported by manual handling processes when called for.

It's always safety first, but let's be honest, you can't inundate your prospects with security check after security check. Thankfully, HelloFlow strikes that balance between timely, thorough, safe, and seamless digital onboarding. It's the total package of better compliance, due diligence, and faster onboarding. Curious to look under the hood and see how it works? Book a demo today!

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