By: Jane Hennessy, Head of External Alliances
It seems the hottest topic at almost any payments conference is speeding up payments — whether it is Same Day ACH, Real-time Payments or Faster Payments. This held true at the EPCOR Payments Conference in Overland Park, KS at the end of October.
One of the topics surrounding faster payments is whether faster payments equals faster fraud. While that issue was argued from both sides (i.e., the equation holds true vs. faster actually helps mitigate risk by minimizing liquidity and counter-party risk), there seems to be agreement that financial institutions need to build out a variety of risk tools to better manage risks associated with speeding up payments. Some of these tools include dollar amount caps on transactions, and strengthening controls to avert corporate computer takeover for faster transactions as hackers will be targeting those and consider pre-funding for some customers.
An area where all can agree is that regulators will be focusing on these faster payments as they are rolled out starting next year. Financial institutions need a multi-pronged focus on direct originators as well as third-party payment processors and third-party senders. The regulations require banks to KYC and KYCC. One way to meet regulatory requirements is to insure you have done rigorous KYC when onboarding new customers, but also conduct ongoing monitoring to insure no adverse business changes have occurred. Once a year is not sufficient for reviewing originators. What is important is to compile as many data points as you can, both onboarding and ongoing, so you have more information than a fraudster could know.
Get a step ahead of the coming changes in payments by visiting our website so you can strengthen your KYC procedures and automate your processing so you too can keep up with the speed of change.