TREASURY FRAUD & WHAT CONTROLS - Strategic Treasurer

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

TREASURY FRAUD & CONTROLS2021 SURVEY RESULTS

CRAIG JEFFERYFounder & Managing Partner

Strategic Treasurer

OMRI KLETTERGlobal VP, Fraud & Risk Management

Bottomline

This presentation is provided by Strategic Treasurer and Bottomline

WHATResults, analysis, discussion and

take-aways from the 2021 Treasury

Fraud & Controls Survey.

WHENTuesday, February 10, 2021

11:00 AM – 12:00 PM EST

WHERE

Live Online Presentation

Replays at StrategicTreasurer.com

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

SPEAKERSGET TO KNOW TODAY’S

SUBJECT MATTER EXPERTS

CRAIG JEFFERY

Craig Jeffery formed Strategic Treasurer LLC in 2004

to provide corporate, educational, and government

entities direct access to comprehensive and current

assistance with their treasury and financial process

needs.

His 20+ years of financial and treasury experience as

a practitioner and as a consultant have uniquely

qualified him to help organizations craft realistic goals

and achieve significant benefits quickly.

OMRI KLETTER

Prior to joining Bottomline, Omri was responsible for managing the fraud and authentication solutions in the EMEA region for NICE Actimize. Omri began his career in Israel’s elite technological intelligence army unit, where he served as the Head of the Global Counter-Terrorism section.

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

ABOUT THE SURVEY

KEY POINTS OF INTEREST

SECURITY PRACTICES

TOP AREAS OF SPEND AND FOCUS

FRAUD IN CONTEXT

CURRENT STATE

KEY TAKE-AWAYS

FROM THE RESEARCH

PAYMENT MODERNIZATION

SPEED & SECURITY

TOPICS OF DISCUSSIONKEY AREAS OF FOCUS &

ANALYSIS

CONTROLS

USE OF TECHNOLOGY

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

SURVEY QUICK STATS2021 TREASURY FRAUD & CONTROLS

August September October November December January

330+Respondents

84%Corporates

16%Banks

6th

Year of Research 100+ Questions

?9 Week

Survey Run-Time

Regions of Operations

North America

Latin & South America

Western Europe

Asia-Pacific

Africa

Middle East

89%

34%

45%

22%

28%

37%India25%

Eastern Europe

31%

Run-Time

Corporate respondents that think the threat-level of fraud has increased or significantly increased in the past year.

2021 87%

2020 76%

2019 73%

2018 84%

Fraud Increasing at an All Time High

Development Analysis

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

FRAUD ESCALATIONAUTOMATION ASSISTS IN BROAD ATTACKS

Corporate: In the past year, I think that the threat-level of fraud has:

35%

54%

6%

2%

1%

2%

15%

70%

13%

2%

1%

0%

Significantly increased

Increased

Stayed the same

Decreased

Significantly decreased

Unsure

Small (< $1B) Large (> $1B)

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

COVID-19 CONNECTIONFRAUD RELATED TO THE PANDEMIC

Corporate Sub Question: Was the fraud you experienced related to COVID-19?

17%

4%

64%

14%

Yes, some of it

Yes, all of it

No

Unsure

1/5 OF COMPANIES EXPERIENCING FRAUD SAW THE COVID-19 CONNECTION. Criminals are opportunistic and used the pandemic to improve their yield.

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

POLL QUESTION

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

THEN & NOWLOSSES FROM FRAUD

Social Engineering by phone, email or text

Not Asked in 2019 8%

Business Email Compromise (BEC), imposter fraud, CEO fraud

8% 14%

Ghost Payroll / Vendor fraud6% 6%

Payment Diversion (Changing payment details on an invoice)

6% 15%

Ransomware (data encryption)2% 8%

2019 2021

Fraud attempts are increasing along with the losses. Those that report suffering a loss in the last 12 months have significantly increased over a two-year period.

Wire Fraud (System access or credential theft)

5%3%

Note: Only top 6 responses from 2021 displayed

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

Discussion & Implications

ESCALATION OF FRAUD

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

SECURITY SPENDA THREE-YEAR TREND ON SPENDING MORE/SIGNIFICANTLY MORE

Corporate: What are your spending plans for treasury fraud prevention, detection, and controls?

3%

76%

19%

2% 3%

75%

19%

2%

7%

66%

23%

5%

Spend less than prior yearsSpend about the sameSpend moreSpend significantly more

2021 2020 2019

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

FOCUSING ON BECLARGEST RISK AND AREA OF SPEND

Note: Only top 6 responses displayed

Corporate: Which areas do you intend to spend more or significantly more on fraud prevention, detection or controls? (Select all that apply)

38%

34%

30%

29%

29%

29%

Business Email Compromise (BEC) /CEO email fraud / imposter fraud /

social engineering fraud

Bank reconciliation

File controls, digital signing

Bank transaction fraud (unauthorizeddebits, wire fraud)

Transaction controls

Card processing and controls

Banks: What do you perceive as your greatest fraud risk over the coming 12-24 months? (Select up to three)

86%

40%

37%

23%

14%

9%

7%

Business Email Compromise/Authorized Fraud

Account Takeover (Credential stuffing,etc.)

Check Fraud

Application Fraud

Brute Force Attacks

Deposit Fraud

Insider Fraud

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

USE OF CONTROLSTHE TOOLS ARE AVAILABLE – NOT ALL ARE TAKING ADVANTAGE OF THEM

Corporate: What controls does your organization have to prevent payment fraud? (Select all that apply)

78%

65%

64%

59%

54%

53%

49%

34%

30%

3%

Segregation of duties in accountspayable

Physical check (cheque) controls

Check (cheque) positive pay

ACH positive pay

ACH debit block

Dual control process to update criticalcustomer information to prevent

account takeover

Check (cheque): payee match positivepayment

File control (pre and post submissiontransaction comparison reports)

Wire positive pay

Other

Bank: What are the top three security practices or tools you wish all your clients used but that many are not currently leveraging?

63%

63%

57%

50%

33%

17%

17%

Implement dual controls / multifactorauthentication wherever possible

Leverage payment controls such asPositive Pay, ACH debit block, etc.

Timely reconciliations (preferablysame-day, definitely within 1 week)

Regular internal training & testing (i.e.on how to identify suspicious emails)

Maintain updated antivirus software &firewall

Employ user monitoring software

Only using secure networks &encrypting data at rest and in transit

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

THE POWER OF MACHINESLEVERAGING TECH

61%

60%

43%

39%

32%

32%

30%

22%

16%

11%

6%

Multi-factor authentication (MFA) on all wirepayment platforms

Multi-factor authentication (MFA) logins to ourcorporate infrastructure

Multi-factor authentication (MFA) on all emaillogins for new devices

3rd Party anti-fraud software

Automated transaction monitoring

Payment Fraud Detection Solution – Interdiction (Payments are held until released by analyst)

Internal system monitoring / user monitoringsoftware

Payment Fraud Detection Solution – Alert Only

Automatic interdiction

User behavior analytics

None of the above

Corporate: What controls do you have in place to prevent fraud? (Select all that apply)

OF THOSE WITH INTERNAL SYSTEM MONITORING

68% detect unauthorized users trying to access restricted systems

51% detect unusualchanges to payment beneficiary information

47% detect unusualpayment amounts

39% detect unusualpayment volumes

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

POLL QUESTION

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

ADOPTING TECHFOR PREVENTION AND DETECTION

Corporate respondents reported that they are exploring the following technologies:

Fraud detection

AI/ML

45%Fraud

detection biometrics

30%Fraud

prevention AI/ML

43%Fraud

prevention biometrics

32%

+14% that haveimplemented or

have plans to implement







20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

DISCUSSION & IMPLICATIONS

SPENDING, CONTROLS & TECH

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

ACCOUNTABILITY & REPORTINGREALIZING THE NEED TO TRACK AND STAY CURRENT

DIRECT ACCOUNTABILITY TO MONITOR FRAUD DEVELOPMENTS JUMPS OVER FIVE-YEAR PERIODCorporates that formally assign roles and have a regular reporting cadence to the group:

FRAUD PREVENTION AND

DETECTION DEPENDS ON EVERYONE

86% of corporates have

employee training at

least annually on fraud

66% of corporates have a

centralized hub for

reporting suspicious

activity

57% have a hotline to

anonymously report fraud

concerns

2021 36%

2020 29%

2019 24%

2018 25%

2017 22%

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

Corporate: In the past year, has the cost and burden of providing treasury fraud and controls services become more or less burdensome on your organization?

11%

38%

48%

3%

0%

6%

27%

63%

4%

0%

Significantly more

More

About the same

Less

Significantly less


THE PRICE OF COMPLIANCEFEELING THE PAIN, ESPECIALLY FOR SMALL FIRMS

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

10%

11%

29%

36%

14%

9%

23%

18%

26%

25%

Yes, it is already completed

Yes, it is under way

It is being considered / under review

No

I don't know


Corporate: Do you have a Payments Modernization program?

LARGE IS LEADING THE WAYIN PAYMENTS MODERNIZATION

Modernization often translates to speed (faster) and new formats/methods (better) for making payments. Interdiction of payment anomalies is a critical defensive measure that follows the “Speed Matters” security principle.

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

BANKS ON MODERNIZATIONOFFERING REAL-TIME PAYMENTS & API LIBRARY

Bank: Do you have a Payments Modernization program? Bank: What does your Payments Modernization program include? (Select all that apply)

7%

43%

7%

10%

33%

Yes, it is already completed

Yes, it is under way

It is being considered / under review

No

I don't know

67%

67%

40%

40%

27%

RTP

API library

FedNow

Fintech Integrations

Fraud measures upgrade

Note: Only top 5 responses displayed

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

Bank: What are the key areas of technology investment within your organization? (Select all that apply)DIGITAL

TRANSFORMATION & CUSTOMEREXPERIENCEWITHIN COMMERCIAL BANKING

The movement away from checks towards digital banking and electronic payments is nearly universal, and most banks indicate the need to leverage a solution provider to make this transformation secure. COVID-19 drove a wholesale and long-term WFH environment, which saw many business continuity planning (BCP) adjustments, changes in the workforce, pressure to move to digital due to distance, and even printers moved to the home office.

90%

77%

63%

60%

37%

Digital Transformation around customerexperience within Commercial Banking Channels

Fraud, risk & compliance

Back-office automation and cost reduction

Digital Transformation around customerexperience within Retail Banking Channels

Cloud migration

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

PAYMENT HAS LEFT THE BUILDINGAND IT'S TAKING A WHILE TO REALIZE IT

Specifically considering your largest ACH or Wire Fraud incident, how long did it take you to detect it and by what method did you detect it?

13%

16%

26%

33%

23%

16%

15%

10%

16%

15%

13%

13%

13%

13%

13%

4%

13%

10%

6%

13%

6%

Vendor / beneficiary notified you

Account reconciliation

Other

Same day 2-7 days 7-14 days 14-30 days 1-3 months 3-6 months 6 months or longer

Nearly a third (32%) of corporates reported having an ACH or Wire Fraud that left the building this year, up from 25% in the previous survey.

23% 1 month+

39% 1 month+

29% 1 month+

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

TAKE-AWAYSIDEAS AND POINTS TO BRING BACK TO THE OFFICE

EVALUATE WFH

RISKS

• Time to do a

one-year

review

• Identify

exposures

from

workarounds

that were

“temporarily”

adopted

TIME TO

BENCHMARK

• Measure

yourself

against

others

(benchmarks)

and against

leading

industry

standards

INVEST IN

TECHNOLOGY

• Your

adversaries

are using tech

to attack

• Identify and

acquire

payment tools

that support

security

objectives

EVERYONE IS

NOW A TARGET

• Train & test

employees on

payment

security

• Assign

specific

people to

particular

areas of

security

20

21

© S

tra

teg

ic T

rea

su

rer,

LL

C.

All

Rig

hts

Re

se

rve

d.

LET’S CONNECTDON’T LET THE LEARNING END HERE…

CONTACT US WITH ANY FUTURE QUESTIONS

STRATEGIC TREASURER

Craig A. Jeffery,

Managing Partner

s [email protected]

Connect with Craig on LinkedIn:

https://bit.ly/3jyDwEI

Thank you for your interest in this presentation and for allowing us to support you

in your professional development. Strategic Treasurer and our partners believe in

the value of continued education and are committed to providing quality

resources that keep you well-informed.

BOTTOMLINE

Omri Kletter

Global VP, Fraud & Risk Management

s [email protected]

Connect with Omri on LinkedIn:

https://bit.ly/3rC6AOn

SURVEY REPORT & INFOGRAPHIC

Thanks to those who completed this year’s survey! Treasury

Ambassadors and respondents to the 2021 Treasury Fraud & Controls

Survey will be emailed the comprehensive results report and

infographic.

Non-respondents can download the summary report and infographic

by clicking the link below.

Request Report

mailto:[email protected]

https://bit.ly/3jyDwEI

mailto:[email protected]

https://bit.ly/3rC6AOn

https://strategictreasurer.com/2021-treasury-fraud-and-controls/?utm_source=TFCwebinar

http://strategictreasurer.com/2020-b2b-payments/?source=B2Bweb




TREASURY FRAUD & WHAT CONTROLS - Strategic Treasurer

Documents

Transcript of TREASURY FRAUD & WHAT CONTROLS - Strategic Treasurer