EXCLUSIVE: Sumsub – How To Eliminate Fraud In The Industry

In recent times, consumers have no doubt felt worried by the onset of the global scamdemic. The rise in attempts of fraud was no doubt accelerated by the pandemic, but how are financial institutions fighting back in response? Sumsub, an international tech company that helps businesses onboard online clients and comply with AML/KYC/KYB regulations with AI-driven identity verification tools, is on a mission to help rid the world of online fraud. After speaking with Andrew Sever, Co-founder and CEO at Sumsub, as well as Tony Petrov, Chief Legal Officer at Sumsub, we confront a big question for the industry – how can we fight fraudsters?

Before we answer that question, what does the state of online fraud look like in the ecosystem today? Petrov expressed how “fraud is becoming just as versatile and complex as the checks used to catch it. Just five years ago, ID and selfie checks were considered a secure verification method; now there are thousands of IDs and selfies available on the darknet. As a result, the industry has moved on to biometric checks (i.e. liveness detection).

And here, too, fraudsters have advanced their methods with biometric spoofing, deep fakes, and so on.” In this ongoing game of cat and mouse, it’s imperative that our fraud prevention systems stay ahead.

With this evolution of fraud, financial institutions are confronted with a key question; how can organisations look to counteract new fraud attempts and remain compliant since the volume and speed of payments have changed dramatically?

Sever expresses that “to successfully fight fraud and stay compliant, organisations need proper resources, with security teams or compliance officers dedicated to these tasks. And if the business is regulated, it’s crucial for it to keep up with existing and new requirements as well. But not all things related to fraud protection can be done in house. It’s okay to find trusted providers on the market and let them do their job for you and your customers. As the volume and speed of online payments increase day by day, we should expect stricter regulations and take necessary steps to perform KYC verification effectively.”

However, some regulations can actually hinder the fraud-detection capabilities of verification instruments — for instance, by requiring the use of “cargo cult” type of procedures, such as video interviews in Germany and 2+2 verification in Australia, or through laws prohibiting collection of “excessive” information that’s “not needed to verify identity”.

Nonetheless, regulation, much like the fraud prevention industry, exists for the benefit and protection of the consumer and so this is not something we should scold too eagerly. When it comes to what Sumsub is doing to protect consumers against fraud, Sever and Petrov shared much about their upcoming ventures:

• KYT (Know-Your-Transaction) verification and full-cycle transaction monitoring: this will let Sumsub cover the whole customer lifecycle–from onboarding to transactions. “We expect a warm reception for this since it will help companies monitor transactions, detect and report suspicious activity, and stay compliant. This will be another step to becoming a truly full-cycle orchestration solution. We already have KYC and KYB checks, so KYT is the one type of verification left to introduce to our clients”, shared Petrov.
• Enhancing video identification solutions to make it faster and more user-friendly. Sumsub is going to introduce a Mobile SDK version that will attract more applicants on their mobile app. They’ll also enhance the onboarding flow by adding online queue monitoring to encourage users to complete the KYC procedure.

When we look at what can be done from the customer’s perspective in this battle, education in scam prevention is crucial, especially for high-risk economic activity such as crypto investments or FX. It’s equally important to beware of scams that collect personal information to sell to fraudsters for use in spoofing attempts.

For instance, Petrov notes how “on our YouTube Channel, we educate our audience on these risks and offer best practices for safety elsewhere in the digital world. At the same time, we build our customer flows so that for safe and successful use even by customers with limited, if any, knowledge of online safety.”

The battle to protect our consumers from fraud is an ongoing concern, but it is one that we must always win, for the sake of the consumer, our industry, and the integrity of our entire ecosystem.