Financial Services
Strengthening cybersecurity measures within AML frameworks
As financial systems become more digital, criminals exploit technology to launder money on a massive scale. According to UNODC estimates, money laundering worldwide each year accounts for roughly 2% to 5% of global GDP. AML risk management frameworks are designed to detect and report suspicious transactions, but they lack cybersecurity measures to address cyber-enabled financial crimes. Cybercriminals use advanced digital methods to move money undetected, making cybersecurity for financial institutions critical in financial crime prevention.
The difference between cybersecurity and AML frameworks
AML frameworks identify suspicious transactions and ensure compliance with anti-money laundering regulations. They rely on monitoring financial activity, customer due diligence, and risk assessments to detect illicit financial flows.
Cybersecurity frameworks protect systems, networks, and financial data from cyber threats. They include encryption, access controls, and real-time threat detection to prevent data breaches and fraud.
While AML frameworks track transactional patterns, cybersecurity safeguards the systems through which transactions occur. Without strong cybersecurity, cybercriminals can exploit digital vulnerabilities to bypass AML controls. A combined approach is necessary to prevent financial crime.
The relationship between cybercrime and money laundering
Cybercriminals blend several digital and financial tactics to launder money efficiently.
Online fraud and identity theft
Cybercriminals steal personal and financial data through phishing, fake websites, and social engineering. Stolen credentials enable them to create fraudulent accounts and transfer illicit funds while bypassing AML controls.
Ransomware and extortion
Attackers demand ransom payments in cryptocurrency, then use mixing services to hide transaction origins. Some combine ransomware with financial fraud, layering stolen funds through multiple transactions.
Cryptocurrency and digital assets
Criminals exploit cryptocurrency’s anonymity by converting illicit funds and using mixing services. ICOs and DeFi platforms provide additional laundering channels by moving assets across wallets undetected.
Darknet marketplaces
The dark web facilitates the sale of illicit goods, with payments laundered through multiple accounts before re-entering the mainstream financial system.
Money mule networks
Cybercriminals recruit individuals to transfer illicit money across accounts, obscuring its origin. Some use shell companies and fake invoices to justify large transfers.
Hacking and cyber heists
Criminals breach banks and financial institutions, stealing funds and rapidly transferring them across borders. ATM and payment system hacks further enable laundering through controlled accounts.
Without cybersecurity, AML frameworks struggle to detect and prevent cyber-enabled money laundering.
The need for strengthening cybersecurity measures in AML frameworks
AML frameworks detect financial crime after transactions occur, but they cannot prevent cybercriminals from manipulating digital financial systems. Cybercriminals use AI to generate fake identities, conduct instant cross-border transactions, and exploit security gaps to evade detection. Financial data protection is at risk due to frequent data breaches that expose personal and banking information, enabling fraudulent activity.
Regulators now require cybersecurity for financial institutions as part of AML risk management. Without cybersecurity, financial institutions risk compliance violations, fraud losses, and reputational damage. Integrating cybersecurity into AML frameworks strengthens financial crime preventionv by detecting fraud at the source.
Ways of strengthening cybersecurity measures in AML frameworks
There are a number of ways that cybersecurity can be integrated within AML frameworks.
Multi-layered security architecture
Dividing networks into smaller security zones limits unauthorized access. Firewalls and intrusion prevention systems (IPS) monitor and control incoming traffic, blocking malicious activity.
Strengthening financial data protection
Using encryption protects sensitive financial data in transit and at rest. Data loss prevention (DLP) tools detect and prevent unauthorized data transfers, reducing exposure to cyber threats.
Enhancing identity and access management
Multi-factor authentication (MFA) strengthens system access controls. Role-based access control (RBAC) ensures only authorized personnel interact with sensitive financial systems.
AI-driven fraud detection and risk assessment
AI and machine learning analyse transactions in real time to detect anomalies. Predictive analytics assesses historical transaction data to flag high-risk activities. Automated risk scoring prioritizes investigations and stops suspicious transactions before they escalate.
Advanced transaction monitoring with cybersecurity insights
Combining AML transaction monitoring with cybersecurity threat intelligence detects fraud earlier. Behavioural analytics identifies deviations from normal transaction patterns, improving fraud detection.
Blockchain for transaction security
Blockchain and distributed ledger technology (DLT) provide an immutable record of transactions, enhancing transparency. Smart contracts enforce rule-based transactions, reducing fraud risks.
Threat intelligence and incident response
Real-time threat intelligence feeds identify emerging cyber threats that could impact financial systems. Regular penetration testing helps institutions find and fix security vulnerabilities.
Continuous compliance and regulatory alignment
Cybersecurity measures should align with global AML and data protection regulations. Regular audits and risk assessments help ensure ongoing compliance with evolving security standards.
How can Infosys BPM help?
Infosys BPM empowers organizations with end-to-end Financial Crime Compliance (FCC) solutions across AML, KYC, and Fraud Management, helping them navigate rising compliance costs and evolving regulations. It enhances AML operations with automated monitoring, risk-based segmentation, and dynamic compliance updates. KYC solutions streamline onboarding through biometric verification and real-time data enrichment, ensuring accuracy and efficiency. Fraud management leverages behavioural biometrics, omni-channel detection, and real-time alerts to prevent threats. By combining automation, analytics, and regulatory expertise, Infosys BPM enables businesses to proactively manage risks while ensuring compliance.
