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Ten Best Practices

for Combatting

Payments Fraud

1. Understand your vulnerabil-

ities.

With so many types of

payments fraud, it’s impossible

to do a good job of combatting

them without understanding

what they are. Examples include

external threats such as hacking

of treasury systems by third par-

ties, as well as a raft of internal

threats. The latter include fraud-

ulent payments sent by employ-

ees to a company’s bank, either

willfully or as an unknowing

consequence of a spear-phishing

attack; and fraudulent purchase

orders and invoices created by

employees that are then paid

out to related third parties.

2. Erect roadblocks to unautho-

rized access to corporate infor-

mation systems.

Deploy robust

login and user authentication

procedures, including dual-fac-

tor and in some cases multi-

factor authentication.

3. Move finance data to the

cloud.

While data security has

long been cited as a reason for

not moving data to the cloud,

the growing consensus today is

that cloud providers, for whom

security is a core competency,

offer greater, not weaker, secu-

rity systems and protocols than

most companies can deliver on

their own. Because a significant

percentage of payments fraud

originates internally, moving cor-

porate finance data to the cloud

can reduce the opportunity for it

to occur.

4. Boost control over global

bank accounts.

Maintaining

a handle on bank accounts

becomes more difficult as

companies grow and expand

globally, but it’s a task that can’t

be ignored. Companies need to

make sure they have systems

that can provide transparency

into accounts, authorized sign-

ers and account documentation;

track all bank activity; and effi-

ciently reconcile accounts with

banking partners.

5. Make use of digital

signatures.

All commerce and

banking today is electronic at

some point in the payments

cycle. Digital signatures,

which can help authenticate

transmitted payment files, can

minimize opportunities for

payments fraud.

6. Centralize payments activity

in a single system.

Coupled

with multiple, standardized

and electronic approvals, an

integrated payments system

allows for a complete and

detailed electronic paper trail

for all payments, minimizing

opportunities for fraud.

7. Standardize settlement

instructions for financial trades.

For any kind of investment

transaction, including foreign

exchange and derivatives trans-

actions, embedding standard-

ized settlement instructions

in corporate financial systems

can not only improve efficiency

but also help block any redirec-

tion of funds to unauthorized

accounts.

8. Educate employees.

Even the

best anti-fraud program will spot

fraud only after it’s occurred.

That’s still extraordinarily

valuable, especially when the

system is able to spot the fraud

quickly. But one of the best ways

to prevent payments fraud is

to educate employees about

the various types of fraudulent

schemes they may encounter, so

that they can avoid being duped

by them and prevent fraud from

occurring in the first place.

9. Update and test your

fraud-detection capabilities.

Corporations should review their

payments-fraud detection/mon-

itoring systems and protocols

to make sure they’re working.

Some companies may have the

resources to do this internally,

but many will find it makes sense

to engage a third-party expert

to both create defense systems

and to test them regularly.

10. Regularly participate in

opportunities to share with

and learn from other orga-

nizations.

Few “industries”

adapt and evolve faster than

the payments-fraud industry. A

company can no more allow its

fraud detection and prevention

program to remain static than

it could allow its products or

services to remain unchanged.

Companies should make sure the

finance function, and any others

that touch on the payments pro-

cess, participate in conferences

and workshops where they can

share with and learn from other

organizations combatting the

same challenges.

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FIVE KEY CFO CHALLENGES FOR ADDRESSING PAYMENTS FRAUD