- The war in Ukraine is putting new pressure on financial firms to keep on top of payment fraud that can be used as a vehicle to mask sanction evasion, Dani Sajed, the head of financial crimes technology and insights at payments tech firm Stripe said at the Money 20/20 conference in Las Vegas Sunday.
- The concern has arisen as companies have put a lot of effort into building new fraud controls while also enabling business in Ukraine and ensuring sanctions are being complied with, he said.
- “There's a tremendous amount of wealth behind folks who are seeking to evade sanctions,” including cartels and other institutions attempting to launder the proceeds of their crimes, Sajed said.
The war in Ukraine raised the stakes for fraud detection, as threat actors devise more complex ways of evading oversight. In particular, fraud syndicates can easily set up fake identities, bolstered by legitimate-looking websites and social media profiles.
For Stripe, which has dual headquarters in San Francisco, Calif. and Dublin, Ireland, that has meant going deeper into the digital identities that underpin increasingly complex fraudulent transactions.
The amount of money “that is invested in hiring people to create different types of web presences to exploit financial systems is far greater than ever seen before,” said Sajed. “You can buy Instagram followers … are there comments, are there likes? It’s almost like you’re looking at ratios and making judgment calls based on that.”
On websites, investigators comb through photos to assess whether they are authentic, or whether fraudsters have used stock images to make a fictitious business appear legitimate.
Tracking identities requires cooperation with third-party vendors and in some cases, using multiple partners on top of Stripe's fraud detection capabilities. Third-party partners are needed because they bring local knowledge across various markets.
Looking at patterns
“A lot of these vendors spend a lot of time training models to say ‘This is what a real ID looks like and this is what a knockoff ID looks like in these countries,’” he said.
Fraud investigators at Stripe also look at patterns of behavior and focus in on unusual activities. If an individual or business moves a large amount of money with a credit card, investigators might have to look into it more closely.
“Very often, you’ll see … they’ll use a credit card to spend $100,000 over and over and over again, and you have to ask yourself, ‘Why is this person paying 2.9% on a $100,000 transaction?’” Sajed said.
Cryptocurrency transactions are more of a “double-edged sword,” he said, because although they offer a degree of anonymity, a detailed record of transactions on the blockchain gives investigators a wealth of information.
“There's obviously a ton of regulatory scrutiny, but it's a matter of making sure that you're taking advantage of the data [that you have], using partners wherever you need to,” he said. “If we fund a wallet, we can see where that money goes in … you have that full view.”