Cross-border payments are essential for global trade but come with high fraud risks. Fraudsters exploit the complexity of international transactions, the lack of unified regulations, and the speed of digital payments. Key issues include synthetic identity fraud, account takeovers, and scams like Business Email Compromise (BEC). In 2023 alone, global payment fraud caused losses of £385 billion, with e-commerce and digital platforms being primary targets.
Key Points:
- Fraud Methods: Synthetic identities, account takeovers, BEC, and money mule networks.
- Emerging Threats: Generative AI, instant payments, and cryptocurrencies increase risks.
- Loss Statistics: £320 billion in projected cross-border fraud losses over the next decade.
- Prevention Tools: AI-powered fraud detection, real-time monitoring, and advanced KYC protocols.
- Collaborative Efforts: Banks and regulators are sharing data to improve detection.
The fight against fraud requires advanced technology, strong verification processes, and collaboration across industries. Fraudsters are evolving, so businesses must stay vigilant and invest in smarter defences.
Current Fraud Trends and Attack Methods
Common Cross-Border Fraud Types
Cross-border payment fraud has become increasingly sophisticated, with criminals exploiting the complexity and rapid pace of international transactions. For businesses operating globally, understanding these fraud tactics is critical.
One prevalent method is synthetic identity fraud. Here, fraudsters merge real and fake information to create entirely new identities. This approach takes advantage of regional verification gaps and delayed detection. The rise of Generative AI has made this type of fraud even more dangerous, enabling the creation of fake documents and deepfake videos.
Account takeover (ATO) fraud is another major threat. Criminals gain access to accounts - often through phishing schemes or data breaches - and use them to make unauthorised payments across borders. The fragmented nature of international payment systems and varying verification standards make it easier for these attacks to succeed. In 2022, an estimated 22% of adults in the US experienced ATO fraud.
Business Email Compromise (BEC) schemes target international transactions by exploiting professional trust. Fraudsters impersonate trusted executives or business partners using hacked or spoofed email accounts, redirecting legitimate payments to fraudulent overseas accounts. The intricate nature of cross-border payments often delays detection, amplifying the financial damage.
Fraudsters also use money mule networks to move stolen funds across borders. These networks rely on a mix of willing accomplices and unwitting participants to transfer money in small amounts, making it harder to trace. The decentralised nature of global financial systems further complicates efforts to track these transactions.
Lastly, card-not-present (CNP) fraud poses a significant challenge in international e-commerce. Without physical card verification, online transactions become vulnerable to fraud. Although cross-border payments make up just 11% of card transactions, they account for a staggering 63% of card fraud cases.
As digital payment systems evolve, fraudsters are finding new ways to exploit emerging vulnerabilities.
New Threats in Digital Payments
The rapid growth of digital payment technologies has introduced fresh challenges in combating fraud. Instant payment systems, for example, leave little time to detect and stop fraudulent transactions, pushing financial institutions - particularly in the EMEA region - to invest in AI-driven fraud detection tools.
A striking example of digital fraud occurred in February 2024, when a deepfake video of company executives led to a fraudulent £20.1 million transfer. This incident underscores how advanced technologies can be weaponised for financial crime.
The rise of Fraud-as-a-Service (FaaS) has also made it easier for criminals to launch large-scale scams. On the dark web and even social media platforms, fraudsters can purchase stolen financial data, forged identities, and hacking tools, lowering the barriers to entry for cybercrime.
Mobile payment platforms have expanded the attack surface as well. Fraudsters exploit these systems using phishing, malware, fraudulent apps, social engineering, and SIM swapping. The convenience and relative anonymity of mobile payments make them an appealing target.
Cryptocurrencies add another layer of complexity. Their decentralised and anonymous nature makes them a preferred tool for laundering money and transferring stolen funds without detection.
Other emerging threats include real-time payment (RTP) fraud and authorised push payment (APP) fraud. In these schemes, criminals use social engineering to trick victims into approving immediate payments. Once processed, these payments are irreversible, making recovery nearly impossible.
Together, these new tactics are amplifying the financial toll of fraud in global digital transactions.
Financial Losses from Payment Fraud
Digital payment fraud is driving significant financial losses worldwide. For instance, Business Email Compromise schemes alone caused losses of approximately £5.4 billion in 2023. The shift to digital payment systems has fundamentally changed the fraud landscape, with digital channels now surpassing traditional methods as the primary source of financial losses in the EMEA region.
Survey data highlights the scale of the issue. Between 2022 and 2023, 88% of respondents reported falling victim to payment fraud. In 2024, 60% of financial institutions and fintech firms reported an increase in fraud, with enterprise banks seeing a nearly 70% rise in fraudulent activity. Organised crime rings were behind 71% of fraud attempts targeting financial institutions, while chargeback fraud grew by 41% annually. Anti-money laundering fines also rose by 50% over the past year.
Karen Boyer, SVP and Director of Fraud Intelligence at M&T Bank, summed up the challenge:
For years, banks have focused on understanding and technological advances of detecting fraud. Fraudsters quickly adapted, noticing that often the weakest link is the human.
The combination of human vulnerabilities and technical gaps in cross-border payment systems continues to drive the rising financial losses experienced by businesses and financial institutions worldwide.
AI Takes the Lead in Fraud Busting: Revolutionizing Cross-Border Payment Security I GFF 2024
Fraud Risk Assessment Methods
Fraud losses reached a staggering £385 billion in 2023, making the need for structured risk controls more urgent than ever. A well-executed fraud risk assessment is the cornerstone of protecting cross-border payments, offering a systematic approach to identifying and addressing vulnerabilities.
Basic Steps in Risk Assessment
Conducting a fraud risk assessment involves a structured process tailored to an organisation's specific risk profile. Regular updates ensure that risk levels remain manageable. This process directly tackles the vulnerabilities highlighted earlier.
The first step is risk identification. Organisations evaluate their environment, internal controls, and culture to pinpoint areas susceptible to fraud. Findings are recorded in a risk register, focusing on areas like the effectiveness of anti-fraud measures, risks of management override, and IT weaknesses.
Next comes risk quantification, which assesses both the likelihood and potential impact of fraud. Factors such as industry fraud trends, transaction complexity, and the number of individuals involved in approvals influence probability. Impact assessment considers financial health, asset importance, and possible liabilities. A risk assessment matrix is often used to visualise and prioritise risks.
From there, organisations develop targeted mitigation strategies. These might include avoiding risks by halting certain activities, transferring risks to third parties, strengthening controls through multi-layered security, or accepting risks when mitigation costs outweigh potential benefits.
"A fraud risk assessment is essential in helping businesses proactively identify external and internal risks that can have a significant impact on their reputation, expose them to criminal or civil liability, or jeopardise assets." – AuditBoard
Technology in Fraud Detection
Technology has become indispensable in fraud detection, especially following thorough risk assessments. Artificial intelligence (AI) and machine learning are now vital tools for analysing vast transaction datasets in real time, uncovering patterns and anomalies that signal fraud.
Real-time monitoring systems allow organisations to act immediately when fraud is detected. AI models, for example, can cut account validation rejection rates by 15–20% while reducing false positives by up to 50% - a major win for compliance teams.
Collaboration is reshaping the landscape as well. Swift and Google Cloud introduced a federated learning system in early 2025, enabling 12 global banks to train AI models locally while sharing insights securely. This approach enhances fraud detection while safeguarding sensitive data.
The impact of AI is evident in case studies: JPMorgan reduced fraud losses by 40%, American Express improved fraud detection by 6%, and Stripe’s AI-powered Radar tool slashed card testing attacks by 80% by analysing billions of transactions in real time. Similarly, the US Treasury Department saved an estimated £3.2 billion in 2024 through machine learning systems.
Emerging technologies like behavioural biometrics and device fingerprinting add another layer of defence. By creating unique digital profiles for users, these methods make it harder for fraudsters to mimic legitimate behaviour. The behavioural biometrics market is projected to grow to £10.4 billion by 2033.
"The industry loses billions to fraud each year, but by enabling the secure sharing of intelligence across borders we're paving the way for this figure to be significantly reduced, and allowing fraud to be stopped in a matter of minutes, not hours or days." – Rachel Levi, Head of AI, Swift
Despite these advancements, challenges persist. Only 23% of merchants currently use AI for fraud detection, and 38% show no interest. Alarmingly, 69% of respondents believe criminals are more adept at using AI for financial crimes than banks are at preventing them.
Customer Verification Processes
Strong Know Your Customer (KYC) protocols are a critical defence against fraud in cross-border payments. These measures verify customer identities, assess risk levels, and provide ongoing monitoring to detect suspicious activities.
Customer Identification Programs (CIP) are mandatory for financial institutions, requiring them to verify identities when opening new accounts. This involves gathering official documents like passports or driver’s licences and cross-referencing them with government databases, including sanctions lists and politically exposed persons (PEP) registries.
Effective verification often combines multiple methods. For instance:
- Government-issued IDs (e.g., passports, driver’s licences) and utility bills help confirm identities.
- Biometric authentication, such as facial recognition, fingerprint scans, and voice recognition, adds another layer of security to combat identity theft.
- Document validation tools use advanced techniques like Optical Character Recognition (OCR) and hologram detection to verify authenticity and detect tampering.
Digital verification methods further enhance security. These include phone and email verification for two-factor authentication, IP and geolocation analysis to identify suspicious logins, and device fingerprinting to create digital profiles that flag unusual behaviour.
"KYC compliance is not just a regulatory checkbox, it's a strategic imperative." – Fraud.com
Enhanced Due Diligence (EDD) is applied to high-risk customers, such as those from high-risk jurisdictions or with PEP status. Continuous monitoring is essential, as customer risk profiles can change and new suspicious activities may emerge.
Effective customer verification is a cornerstone of broader fraud prevention strategies, ensuring a secure foundation for cross-border payments.
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Industry-Specific Prevention Strategies
As fraud methods continue to evolve, industries must adopt tailored strategies that address their unique challenges. From banks managing intricate networks to SMEs navigating limited resources, each sector faces distinct hurdles in preventing fraud, especially when dealing with cross-border transactions.
Adapting Frameworks by Industry
Banks and financial institutions prioritise anti-money laundering (AML) and counter-terrorism measures to align with international standards while juggling fragmented regulations across jurisdictions. To combat risks like exploitation in correspondent banking and digitised lending, these institutions rely on real-time fraud monitoring and AI-driven analytics to spot unusual activity in their vast transaction networks.
For example, Regional Australia Bank, a community-focused institution, adopted advanced AML tools in 2025. This move not only enhanced the detection of suspicious activities but also reduced operational costs and improved reporting to AUSTRAC.
Fintech companies and payment providers face the challenge of staying ahead of rapidly changing digital threats. Their strategies revolve around real-time transaction monitoring, machine learning for anomaly detection, and streamlined KYC/KYB processes. With the rise of e-wallets and instant payments, these companies are heavily investing in AI-powered solutions to ensure financial crime detection keeps pace, especially in regions like Europe, the Middle East, and Africa.
Merchants and acquirers must manage fraud risks tied to diverse local payment methods and foreign-issued cards, particularly in online commerce. Their tools include AI-based risk scoring, 3D Secure authentication, tokenisation, and chargeback management. These measures not only reduce fraud but also maintain consumer trust. The Asia Pacific region, in particular, highlights the challenges of cross-border commerce. Martin Lee from Visa Acceptance Solutions notes:
"The Asia Pacific region, known for its dynamic and fast-growing economies, is witnessing a surge in cross-border commerce and mobile payment adoption. As businesses in APAC continue to expand across borders - accepting payments from diverse markets and currencies - they're also exposed to more sophisticated fraud attempts."
Small and medium-sized enterprises (SMEs) often struggle to address fraud risks due to limited resources and unfamiliarity with fraud challenges in new territories. Many SMEs turn to third-party solutions or guided approaches to navigate global rules and region-specific regulations. Without the in-house expertise of larger organisations, they must rely on accessible and efficient fraud prevention tools.
These industry-specific approaches are further strengthened by collaborative efforts that enhance fraud defence across borders.
Cooperation in Fraud Prevention
Fraud prevention is no longer a solo effort. Collaboration among regulators, financial institutions, and technology providers is reshaping the fight against fraud. Through consortium initiatives and shared databases, organisations are pooling data on known threats to create a comprehensive, real-time picture of emerging risks.
Regional partnerships are also making waves. In 2022, central banks from Indonesia, Thailand, Malaysia, Singapore, and the Philippines signed an agreement to establish interoperable regional payment connectivity by 2025. This initiative aims to simplify cross-border payments using digital wallets, requiring businesses to adapt their fraud prevention strategies to accommodate faster and more convenient transactions.
"Cross-border transactions inherently involve multiple banks, varied payment methods, and differing regulatory frameworks, creating a complex landscape that fraudsters are eager to exploit." – Visa Acceptance Solutions
Given the scale of global financial crime, which sees less than 1% of illicit flows intercepted by law enforcement, intelligence sharing is critical. Citigroup’s "Citi Verify", set to launch in 2025, exemplifies this approach. The service offers bank account verifications to prevent unauthorised account usage and can be integrated into customer onboarding or per-transaction checks. Additionally, payment providers are increasingly involving customers in fraud prevention efforts with educational resources, risk-based transaction prompts, and tools for reporting suspicious activity.
Oku Markets' Fraud Risk Management
Oku Markets exemplifies how industry-wide strategies can be applied effectively. The company embeds robust fraud prevention measures into its currency management and global payment services, ensuring secure cross-border transactions for both business and private clients.
Their approach combines real-time monitoring, enhanced due diligence for high-risk areas, and AML/KYC-aligned customer verification. By tailoring fraud prevention strategies to each client’s risk profile and transaction history, Oku Markets provides a personalised layer of protection. Additionally, the firm prioritises client education, helping customers understand the risks tied to cross-border payments and how to safeguard themselves.
Transparency is a cornerstone of Oku Markets’ strategy. Their clear pricing model extends to their security measures, building trust by offering insight into their protective protocols. Services like forward contracts and trade finance benefit from additional fraud prevention layers, while their online currency exchange platforms use real-time detection to flag suspicious patterns without disrupting legitimate transactions.
"The right vendor is not just selling software, they are safeguarding your institution's future." – Tookitaki
This philosophy drives Oku Markets’ commitment to adopting advanced fraud detection tools while maintaining the personalised service that sets them apart from larger financial institutions. By combining cutting-edge technology with a client-focused approach, Oku Markets ensures comprehensive fraud protection without compromising on service quality.
Managing Cross-Border Payment Fraud Risks
Tackling fraud in cross-border payments demands cutting-edge tools, strategic alliances, and the ability to adapt to ever-changing threats. With fraudulent activity in financial services surging by 21% between 2024 and 2025, organisations must build frameworks capable of keeping pace with increasingly advanced criminal tactics. Below, we explore how integrated detection systems, effective data management, and collaborative efforts help mitigate these risks.
Key Points in Fraud Risk Management
Real-time detection powered by AI is now a cornerstone of fraud prevention. As 90% of financial institutions adopt AI-driven solutions, the shift from traditional rule-based systems to adaptive, intelligent models has become critical. Collaborative AI models, in particular, have proven to double the effectiveness of fraud detection compared to isolated systems.
Collaboration across the industry is also crucial. Sharing resources and intelligence enables organisations to create real-time, comprehensive threat assessments that transcend borders.
High-quality, diverse data is another essential ingredient for success. By combining transaction histories, customer profiles, and threat intelligence with data on user behaviour, device usage, and geolocation, organisations can build more robust detection models. These models are better equipped to spot subtle anomalies across different dimensions.
Breaking down internal silos is an urgent priority. The traditional divide between fraud teams and cybersecurity departments creates gaps that criminals can exploit. Modern fraud prevention calls for unified, cross-functional collaboration, shifting from reactive detection to proactive prediction and fostering a culture of intelligence sharing.
The financial benefits of effective fraud prevention are undeniable. Research shows that 87% of financial institutions and fintech companies save more money than they spend on fraud prevention. Systems like Tookitaki's FinCense, for instance, achieve 90% accuracy in real-time fraud detection while cutting compliance costs by half.
Future Fraud Prevention Developments
Building on these advancements, future strategies will refine and expand current methods.
Artificial intelligence evolution will play a central role. With over 50% of fraud now involving AI and 92% of financial institutions reporting that fraudsters are leveraging generative AI, the battle between criminals and defenders is intensifying. The next wave of AI development will focus on explainable AI, addressing concerns around transparency and trust.
Anusha Parisutham, Senior Director of Product and AI at Feedzai, highlights the challenge:
Today's scams don't come with typos and obvious red flags - they come with perfect grammar, realistic cloned voices, and videos of people who've never existed. We're seeing scam techniques that feel genuinely human because they're being engineered by AI.
Blockchain and digital assets are set to transform cross-border payment security. Blockchain's decentralised, immutable ledgers could reduce costs by 3,300% by 2030 while enhancing security. Meanwhile, Central Bank Digital Currencies (CBDCs) and stablecoins are gaining traction for their ability to facilitate faster, cheaper, and more transparent international transfers, particularly in developing markets.
Privacy-enhancing technologies (PETs) will enable secure collaboration without compromising sensitive data. For example, Swift's experiments with federated learning have shown how institutions can share fraud insights while keeping customer data secure within their own systems.
Advancements in behavioural analytics will go beyond basic transaction monitoring. By creating detailed user profiles and risk scores, these systems will detect suspicious activity based on what is normal for each user, rather than relying solely on pre-set rules.
David Maimon, Head of Fraud Insights at SentiLink, puts it plainly:
Detection is relatively low, the payout is big, and fraud is perceived to be part of the cost of doing business.
This reality underscores the pressing need for more sophisticated and cooperative approaches to fraud prevention.
Future frameworks will prioritise continuous refinement of AI models, ensuring they adapt quickly to new fraud tactics. Enhanced authentication methods - such as multi-factor authentication, biometric verification, and advanced 3D Secure protocols - will provide additional layers of protection without sacrificing user convenience.
The road ahead calls for organisations to embrace both technological advancements and collaborative intelligence sharing. By uniting these efforts, the financial industry can build a stronger defence against the growing threat of cross-border payment fraud.
FAQs
How can businesses use AI tools to reduce fraud in cross-border payments?
AI-driven tools are transforming the fight against fraud in cross-border payments by employing machine learning algorithms to evaluate transaction risks instantly. These systems excel at spotting unusual activities with precision while keeping false alarms to a minimum, ensuring transactions flow smoothly.
By constantly analysing transaction data, these technologies adapt to new fraud tactics, offering strong protection against ever-changing threats. With AI in the mix, businesses can strengthen the security of international payments while maintaining efficiency, providing a safeguard for their financial dealings.
How do banks and regulators work together to combat fraud in cross-border payments?
Collaboration between banks and regulators plays a crucial role in combating fraud within cross-border payments. When data is standardised and systems are made more interoperable, it becomes easier to spot and stop fraudulent activities.
Sharing information more openly between authorities and financial institutions - especially in areas where fraud schemes are particularly complex - creates stronger defences against ever-changing threats. This cooperative approach leads to tighter oversight, harmonised regulatory practices, and the establishment of unified standards, all of which help minimise weaknesses in international payment systems.
How do technologies like cryptocurrencies and instant payments increase fraud risks in cross-border transactions?
Emerging technologies like cryptocurrencies and instant payments bring convenience and innovation but also come with heightened fraud risks, particularly in cross-border transactions.
Take cryptocurrencies, for instance. Their appeal lies in their decentralised nature, but this same quality makes them harder to trace. Transactions are irreversible, which creates opportunities for fraudulent activities such as money laundering. Once a transaction is completed, recovering those funds becomes a significant challenge.
Instant payments, on the other hand, are designed for speed. While that’s great for users, it often means skipping thorough pre-validation checks. Fraudulent transactions can slip through and be finalised before they’re even flagged. The problem is made worse by inconsistent regulatory frameworks and a lack of strong consumer protections across different countries, making it harder to combat fraud effectively.
To navigate these risks, it’s crucial for businesses and individuals to develop robust risk management plans and stay alert to the ever-changing threats in the payment ecosystem.
