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Navigating the waters of compliance and risk management today is no small feat. The challenge we face is stark: outdated methods are failing us as payment systems evolve towards real-time settlement. With payment rails like SEPA Instant and FedNow clearing transactions in the blink of an eye, relying on static risk profiles or periodic assessments simply leaves us wide open to vulnerabilities.
To effectively mitigate these
risks, we must embrace a renewed focus on the new 3Vs of real-time risk
scoring—Velocity, Volume, and Variance. These terms encapsulate vital
indicators that can alert us to the difference between routine transactions and
potential financial crimes.
Let’s delve into these elements.
Velocity captures the pace of transactions. Imagine a client who typically
conducts a couple of transactions daily suddenly initiating 20 transfers in two
minutes. This rapid activity is not just a typical spike; it’s a potential red
flag indicating an attempt to layer illicit funds before our systems can react.
Next is Volume. Large sums moved
at breakneck speed via instant payments can signal the culmination of a fraud
scheme. Fraudsters are adept at exploiting those fleeting seconds before
detection mechanisms kick in, making it crucial for us to keep pace in our
ability to analyse such transactions.
Finally, we have Variance. It is
the deviations in transaction behaviours, recipient patterns, or geographical
trends that often signal potential fraud. Recognizing these subtle shifts early
can save institutions millions, protect reputations, and help avoid regulatory
pitfalls; yet many legacy frameworks still overlook these signs.
The reality is concerning: global
fraud losses skyrocketed to over $50 billion in 2023, significantly driven by
the vulnerabilities of instant payment systems (The Nilson Report, 2024). As
fraud becomes more automated and sophisticated, remaining reactive with static
thresholds simply will not suffice.
Here’s where ComplyRadar
distinguishes itself as a leader in the compliance space. Our platform goes
beyond mere transaction scoring; it harnesses the power of AI and machine
learning to continuously learn and adapt to anomalies in transaction velocity, volume,
and behavioural variance. This evolution puts you in command, enabling you to
identify irregularities swiftly, before they escalate into large issues. With
customisable, no-code solutions, your teams can rapidly adjust detection rules
when integrating new products or payment methods.
Whether you’re in traditional
banking, fintech, or other sectors, leveraging real-time risk scoring via
ComplyRadar translates to fewer false positives, reduced manual workload, and,
most crucially, the ability to act decisively. It empowers compliance programs
to not only keep pace but to stay one step ahead of emerging threats.
