Lights, camera, action: the AI showdown in the fight against fincrime
What makes a film unforgettable? It’s the story that grips you — the hero’s journey through obstacles, dangers, and transformations. It’s not always smooth sailing; there are moments of tension, drama, and near defeat. But the protagonist learns, grows, and ultimately prevails.
The battle against financial crime is no different for banks, fintechs, PSPs, and ecommerce providers. These main characters in the world of finance face their relentless antagonists — cybercriminals, scammers, and even common customers (as it is in the case of friendly fraud). Sometimes they win, sometimes they lose, but they rise again, using new tools and techniques to stay ahead of the game.
Our financial heroes constantly evolve in this never-ending saga, refining their strategies and embracing cutting-edge ‘props’ like AI, machine learning, biometrics (think iris scans, fingerprint recognition, and behavioural analytics), NLP, and graph analytics. Just as a director assembles a top-tier crew to craft a compelling movie, financial institutions are deploying the best technologies and fraud-fighting experts to create masterpieces in battling financial crime.
And who better to distribute this epic than The Paypers, your go-to media outlet for all things fintech? Think of us as the Netflix or Disney of the financial world, delivering the most impactful stories from fraud-fighting warriors to your screen.
Welcome to the ultimate cinematic journey in fraud-fighting: starring next-gen tech
Introducing The Paypers’ Next-Gen Technologies to Detect Fraud and Financial Crime Report — a blockbuster edition that uncovers the greatest tales of banks, fintechs, and PSPs taking on advanced fraud without sacrificing user experience. From battling APP fraud, romance scams, and crypto-related fraud to tackling the challenges of false positives, manual legacy systems, and rising compliance costs, financial institutions are increasingly turning to next-gen tech — often powered by AI.
So, grab your seat, and enjoy this thrilling new chapter in the ongoing film of financial crime detection and prevention — where tech meets strategy, and the fight for security never stops!
Part 1: the rising threats — fraud, regulations, and costs
Financial institutions today face growing challenges in fraud detection and prevention. These challenges are exacerbated by a combination of factors such as the ongoing economic instability and wars across the globe, the wider adoption of innovative payment methods, the development of AI for deepfakes and automated cyberattacks, regulatory pressure and compliance costs, and the increase in frequency and sophistication of fraud typologies and attacks.
According to NICE Actimize’s 2024 Fraud Insights report, authorised fraud grew by 22% in 2023, and the average amount per fraudulent transaction surged by 43%, reaching USD 3,222. A diverse range of scam types targets different financial institutions depending on their business models. Some fraud schemes, like romance scams or investment fraud, operate visibly, while others embed themselves in legitimate accounts for months before triggering fraudulent activity.
New payment methods, such as instant payments, present both opportunities and risks. As of October 2025, payment service providers (PSPs) in Europe must offer instant payments. While these fast transactions appeal to consumers and businesses, they are equally attractive to fraudsters. With only seconds to perform fraud checks, PSPs face a significant challenge in preventing fraud and recovering funds after incidents occur.
Erwin Kulk of the EBA CLEARING explains that introducing ‘good friction’ — pauses in transactions when there’s a real concern — can help protect customers. The new Instant Payments Regulation mandates PSPs to conduct a Verification of Payee (VOP) check before processing SEPA credit transfers, adding a layer of security to build consumer trust.
In addition to fraud threats, financial institutions face a complex and demanding regulatory landscape. For instance, the UK’s new Authorised Push Payment (APP) fraud reimbursement requirements mandate that consumers, microenterprises, and charities be reimbursed within five working days unless fraud is suspected. The reimbursement cost is split 50/50 between sending and receiving PSPs, with a proposed cap of GBP 85,000. This cap, while intended to protect consumers, could disproportionately impact smaller firms, requiring them to build cash reserves into their financial forecasts.
Yuval Marco of NICE Actimize advises banks to strengthen their defences against APP fraud through several strategies including preventing fraudsters from entering the system through more rigorous onboarding processes, implementing inbound transaction monitoring and early account surveillance to catch suspicious activity, using AI models specifically trained to detect APP fraud and tailoring strategies for each scam type, and investing in automation and case management tools to handle the growing volume of claims and expedite funds recovery.
Part 2: the AI revolution: the next leading role in the fight against fincrime
Over the past two years, Generative AI (GenAI) and Large Language Models (LLMs) have emerged at the forefront of technological advancements. Financial firms are increasingly adopting AI, not only for customer-facing solutions but also for backend processes. This has led to firms re-skilling their teams, hiring data scientists, and building internal AI capabilities. The flexible nature of AI allows for experimentation across multiple business domains and problem areas, making it a versatile tool for tackling financial crime.
Unlocking the power of data sharing
AI’s effectiveness in fraud detection depends on access to quality data. Accessing quality data to train AI is crucial for achieving accurate and reliable outcomes. High-quality data should be comprehensive, well-labelled, and representative of the real-world scenarios the AI will encounter. This often involves gathering data from diverse sources, ensuring it is clean, structured, and free of biases. Collaborating with industry experts to understand data nuances, integrating data-sharing frameworks (while respecting privacy and compliance), and continuously updating datasets to reflect emerging trends are key steps in building an AI model capable of delivering meaningful insights and results.
While data-sharing rules exist to combat crime, banks have been cautious, fearing regulatory violations. Jackie Barwell of ACI highlights how banks can now safely collaborate by sharing risk-scoring models and fraud indicators like mule accounts, without compromising customer privacy. In Europe, there are efforts to create a shared fraud data and intelligence ecosystem. The Euro Banking Association (EBA), for instance, has developed the EBA Fraud Taxonomy, which provides a framework for categorising fraud scenarios across payment types. This initiative aims to help financial institutions ‘speak the same language’ when tackling fraud collectively says Annick Moes from the EBA.
The FRAML approach — merging fraud and AML
AI and machine learning are now essential elements of the FRAML (Fraud and Anti-Money Laundering) approach. By integrating fraud prevention and AML efforts, financial institutions can identify overlapping risks, share data, and streamline their anti-crime strategies. According to Roy Prayikulam of INFORM, hybrid AI models that combine machine learning with knowledge-based systems can enhance fraud detection, particularly in fast-paced environments like instant payments, while also reducing false positives.
AI’s role in ecommerce and payment ecosystems
AI is not just limited to banks and PSPs. In ecommerce, fraud prevention faces the challenge of identifying bad merchants or sellers before they can commit fraudulent activity. EverC leverages AI to detect high-risk behaviours in ecommerce platforms. Maya Shabi and Anna Pogreb from EverC explain that their technology combines machine learning (ML) and LLMs to analyse vast data sets and uncover fraud patterns. They emphasise that labelled data is key to training algorithms for more accurate detection.
However, technology alone isn’t enough. The human element remains critical, especially when new fraud patterns emerge with the introduction of new payment methods. AI, therefore, works best when paired with expert knowledge, ensuring adaptability to evolving threats.
Where to begin with AI in financial services
AI offers a broad array of techniques and solutions, but its success hinges on more than just the technology itself. Colin Whitmore from NatWest advises financial institutions to adopt a structured approach, experimenting with AI in an agile manner. By following a clear framework, firms can unlock the full potential of AI in the fight against financial crime.
Part 3: The Paypers promises a fitting finale
We hope that by now, The Next-Gen Technologies to Detect Fraud and Financial Crime Report has captivated your attention, much like a thrilling final act in a great film. Our goal was to demystify AI, showing its powerful capabilities, potential risks, and how it can be your most reliable ally in the fight against financial crime. We trust that these insights will continue to spark discussions and empower you to embrace AI confidently.
We extend our heartfelt thanks to all the experts and contributors whose invaluable insights helped shape this report. Your contributions are the driving force behind this edition, and we are grateful for your partnership in bringing the latest trends and innovations to light for the entire financial crime and payments community.
And a big thank you to you, our readers, for downloading your copy. We encourage you to read it, reflect on its findings, and share your feedback.
Enjoy your read, and let’s keep the conversation going!
About Mirela Ciobanu
Mirela Ciobanu is Lead Editor at The Paypers, specialising in the Banking and Fintech domain. With a keen eye for industry trends, she is constantly on the lookout for the latest developments in digital assets, regtech, payment innovation, and fraud prevention. Mirela is particularly passionate about crypto, blockchain, DeFi, and fincrime investigations, and is a strong advocate for online data privacy and protection. As a skilled writer, Mirela strives to deliver accurate and informative insights to her readers, always in pursuit of the most compelling version of the truth. Connect with Mirela on LinkedIn or reach out via email at mirelac@thepaypers.com.
