Fee Service Suppliers (PSPs) are going through an uphill battle in opposition to monetary crime. As transaction speeds improve and new fee strategies emerge, criminals are exploiting weak spots in AML controls—usually sooner than conventional defences can reply.
In 2023 alone, UK prospects misplaced almost £1.2 billion to monetary crime, with
£580 million misplaced to Authorised Push Fee (APP) fraud within the first half of the yr. These scams regularly mark the start of complicated cash laundering operations, making sturdy detection and prevention important for PSPs.
Why conventional AML approaches are failing
For years, PSPs have relied on static guidelines, guide critiques, and after-the-fact detection to handle monetary crime dangers. However at present’s criminals function with growing sophistication, utilizing strategies reminiscent of:
Skilled mule networks – Giant-scale operations that transfer illicit funds by a number of accounts throughout completely different jurisdictions.
Blended fee strategies – Fraudsters combine conventional financial institution transfers with digital wallets and cryptocurrencies, making detection tougher.
Excessive-speed transactions – Actual-time funds permit criminals to switch funds immediately, usually earlier than pink flags are raised.
These gaps in detection permit fraud to unfold undetected—whereas outdated AML processes set off false positives that frustrate professional prospects and waste useful compliance sources.
The 5 largest AML challenges for PSPs
PSPs at present face 5 main boundaries to constructing efficient AML defences:
Regulatory strain – Frameworks like 6AMLD and PSD2 demand real-time transaction monitoring, enhanced due diligence, and proactive danger detection. Falling quick means fines, reputational harm, and elevated scrutiny.
Cross-border complexity – AML compliance is inconsistent throughout jurisdictions, making it troublesome for PSPs to trace monetary crime successfully on a world scale.
Actual-time fee dangers – Criminals reap the benefits of instantaneous transactions to maneuver cash earlier than pink flags could be raised. With out real-time monitoring, illicit funds disappear earlier than intervention is feasible.
The rise of cash mule networks – Fraudsters are more and more recruiting youthful people, with a 60% rise in under-21s appearing as cash mules. These networks disguise illicit transactions throughout a number of accounts, making monitoring extremely
troublesome.
Balancing safety with buyer expertise – Overly delicate AML programs create false positives, blocking professional transactions and driving annoyed prospects to opponents. However lowering friction with out shedding safety is a serious
problem.
For PSPs, the problem is twofold: strengthen AML controls with out disrupting professional funds or burdening compliance groups with extreme false positives.
How PSPs can strengthen their AML defences
To maintain tempo with evolving threats, PSPs should shift in direction of clever, data-driven AML methods. This implies shifting past rule-based programs to AI-powered analytics, real-time transaction monitoring, and privacy-preserving collaboration strategies like
federated studying.
✅ AI-driven insights – Detect suspicious patterns sooner and cut back false positives.
✅ Graph-based transaction monitoring – Establish connections between accounts utilized in laundering schemes.
✅ Proactive buyer schooling – Assist prospects recognise scams earlier than they occur.
✅ Stronger onboarding checks – Guarantee fraudulent accounts are stopped earlier than they enter the system.
The message is evident: PSPs who depend on outdated AML strategies will fall behind—going through elevated fraud dangers, compliance failures, and reputational harm.
With regulators tightening necessities and criminals evolving their techniques, now’s the time for PSPs to strengthen their AML defences.
