New Framework Targets Rising Financial Crime Threats

Experts are warning about a rise in online fraud using some of same techniques as cybercriminals. For example, a recent FBI report found that cryptocurrency scams have surged in the past year, resulting in $9.3 billion losses. Meanwhile, Google issued an urgent warning to 3 billion Gmail users about a sophisticated phishing attack exploiting a vulnerability in the company’s infrastructure.

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East and Southeast Asia have become major hubs, and the United Nations warned that these gangs are expanding their scam operations globally, partially due to growing law enforcement crackdowns. New Zealand’s banks are bringing in a suite of new measures aligned with global best practices to further protect New Zealanders from criminal scammers.

To help financial institutions counter crime, the FS-ISAC earlier this month introduced a major initiative: the Cyberfraud Prevention Framework. This new initiative is designed to unify cybersecurity and fraud prevention teams to more effectively protect customers and secure the enterprise.

One of its central innovations is the creation of a common structure and lexicon, allowing cyber and fraud teams to better identify knowledge gaps and synchronize their response efforts. “Fraud and cyberteams traditionally get involved at different points in the attack lifecycle,” Linda Betz, executive vice president of global community engagement at FS-ISAC , told Information Security Media Group.

For instance, in most cases, cyberteams focus on the early warning signs such as phishing or malware infections, while fraud teams typically respond after unauthorized transactions have occurred. The framework helps bring these two perspectives together earlier.

The Cyberfraud Prevention Framework is built around five distinct phases of a cyber-enabled fraud attack. The first phase is reconnaissance in which threat actors gather intelligence and prepare infrastructure. Then for initial access, attackers establish a foothold through phishing, credential stuffing or exploiting third-party vulnerabilities. The third phase is positioning, during which criminals manipulate account details or create unauthorized access; then execution, where unauthorized transactions are initiated. In the final phase, monetization, stolen funds are transferred to mule accounts or laundered.

The initiative is aimed at spotting and stopping scams earlier – during the reconnaissance or initial access phase – rather than when money has already been moved. This shift from reaction to prevention aligns with broader trends such as the United Kingdom’s newly launched Fraud Intelligence Reciprocal Exchange, which gives banks and tech giants the ability to share live scam indicators.

While larger institutions with mature fraud and cyberprograms may find it easier to operationalize the framework, FS-ISAC emphasizes that “all organizations, regardless of size, stand to benefit.” “Smaller banks and fintechs can use the model as a foundation to build cross-functional detection and response capabilities,” Betz said.

Yet experts caution that frameworks alone, no matter how well-designed, are only one part of the solution. “One challenge some organizations may face is cultural. Historically, encouraging teams with historically separate mandates to work together,” Betz said.

Many of the stakeholders hold separate budgets and responsibilities and are shrouded in old methods of working. Often, they believe they know best and do not want to give away responsibility to another unit. It could be an admission of failure or a loss of budget, for example.

But the framework does not envision complete merging fraud and cybersecurity practices. It identifies relevant stakeholders to create a strategic group that can collectively look at the issues and set objectives and strategy, Betz said.