Blog

Key Facts Statements (KFS) For Loans and Advances

Posted on | by Signzian

Reserve Bank of India (RBI), on 15th April 2024, announced the new guidelines for Key facts statement (KFS) for retail and MSME terms loans and advances, containing essential information such as the all-inclusive APR and recovery and grievance redress mechanisms.

These guidelines are mandatory to ensure enhanced transparency in lending and enable customers to make informed decisions, thereby empowering borrowers to make informed financial decisions.

To whom are these changes intended?

    • All Commercial Banks
      • Local Area Banks,
      • Small Finance Banks, 
      • Regional Rural Banks, 
      • excluding Payments Banks
    • All Co-operative Banks
    • All NBFCs
      • Housing Finance Companies (HFC)
      • Microfinance institutions (MFI)

     

Here’s a quick checklist for your perusal

I am a bank and we use KFS for credit cards as well. Do these guidelines apply to credit card products as well?

No – these changes are only for “Retail and MSME term loans.” However, with implied regulations and the changing lending landscape, we prefer to look for new guidelines from the RBI.

“Credit card products and corporate loans” are not included in the recent KFS guidelines shared by RBI.

2. As announced in the Statement on Developmental and Regulatory Policies dated February 8, 2024, it has been decided to harmonize the instructions on the subject. This is being done in order to enhance transparency and reduce information asymmetry on financial products being offered by different regulated entities, thereby empowering borrowers for making an informed financial decision. The harmonised instructions shall be applicable in cases of all retail and MSME term loan products extended by all regulated entities (REs)

What are the changes mandated by RBI?

1. “The new KFS statement should be in a standardized format with an added APR and Amortization sheet.”

4. REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given in the Annex A. The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same.
6. The KFS shall also include a computation sheet of annual percentage rate (APR), and the amortisation schedule of the loan over the loan tenor. APR will include all charges which are levied by the RE. Illustrative examples of calculation of APR and disclosure of repayment schedule for a hypothetical loan are given in Annex B and C respectively.

As per Annex A, provided by RBI


The KFS annex A has ensured transparency by providing the exact format in 2 parts:

Part 1: Interest rate and fees/charges

  • Loan proposal/account No.
  • Type of Loan
  • Sanctioned Loan amount (in Rupees)
  • Disbursal schedule (including stages and related clauses if not disbursed 100% upfront)
  • Loan term (specified in years, months, or days)
  • Installment details (type, number, amount of EPIs, and commencement of repayment)
  • Interest rate (percentage and type: fixed, floating, or hybrid)some text
  • Additional floating rate information: Reference Benchmark, Benchmark rate, Spread, Final rate, Reset periodicity, Impact of benchmark change on EPI, and number of EPIs
  • Fees/Charges (payable to the RE, payable to a third party through RE, including specifics like processing fees, and insurance charges)
  • Annual Percentage Rate (APR) (expressed as a percentage)
  • Details of Contingent Charges (penal, foreclosure, switching charges, etc.)

Part 2: Other qualitative information

  • Clause of Loan agreement relating to engagement of recovery agents
  • Clause detailing grievance redressal mechanism
  • Contact details of the nodal grievance redressal officer (phone number and email)
  • Information on potential transfer of the loan to other REs or its securitization
  • Details related to collaborative lending arrangements: Names and proportions of funding by the originating and partner REs, blended interest rate
  • Specific disclosures for digital loans: some text
    • Cooling off/look-up period
    • Details of the LSP acting as a recovery agent

KFS annex B has illustrated the computation of ARP for retail and MSME term loans:

KSF annex C has illustrated the repayment schedule under equated periodic installment (EPI) for the hypothetical loan.

2. “The KFS should be written in standard language for borrowers to understand.

4. REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given in the Annex A. The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same.

It has been mandated by RBI that the content of KFS should be explained to the borrower and the KFS shared with the borrower should be in the language understood by the borrower.  

Since most of the borrowers don’t speak only English or Hindi, as a best practice, the KFS and loan agreement should be in a language understood by the borrower and the loan execution journey for eSign should also be in the same language.

3. Lenders should help borrowers understand KFS before loan execution.

4. REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given in the Annex A. The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same.

It has been mandated by RBI to allow borrowers to review the entire KFS before signing.

In physical flow, the KFS should be shown and reviewed by the borrower.

In digital flow, during the loan execution journey, the KFS shall be reviewed by the borrower who could accept or reject it.

4. Loans with tenure >7 days -> The KFS validity will be 3 working days.
Loans with tenure <7 days -> The KFS validity will be 1 working day.

Further, the KFS shall be provided with a unique proposal number and shall have a validity period of at least three working days for loans having tenor of seven days or more, and a validity period of one working day for loans having tenor of less than seven days.1

Explanation

Validity period refers to the period available to the borrower, after being provided the KFS by the RE, to agree to the terms of the loan. The RE shall be bound by the terms of the loan indicated in the KFS, if agreed to by the borrower during the validity period.

Simply put,

For loan tenure => 7 days or more, the lender has to provide at least 3 or more working days for the borrower to review and sign the KFS

For loan tenure <= 7 days, the lender has to provide at least 1 working day for the borrower to review and sign the KFS

Note: The validity period will start from the day KFS is provided to the borrower. It is a minimum timeframe in which the borrower is entitled to either accept or reject the KFS.

There are two approaches by which lenders can share the KFS document with the borrower:

  1. Approach 1: It suggests that the KFS shall be sent to the borrower first – To review, acknowledge, and eSigned. Afterward, the loan agreement shall be sent to the borrower – To review, acknowledge, and eSigned.The KFS and loan agreement will not be part of the same loan kit.Note: The validity period as stated above is only for KFS. The lenders can choose loan agreement expiry as per their internal regulations.
  2. Approach 2: It suggests that the KFS and loan agreement shall be sent to the borrower as part of the same loan kit – To review, acknowledge, and eSigned.


Note: The validity period as stated above is now for the entire contract. 

Note: Lenders can also upload scanned copies of KFS and loan agreements and share them with borrowers for signing.

5. The borrower should consent and acknowledge the agreement before signing.

4. REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given in the Annex A. The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same.

In the digital KFS flow, there are multiple ways you can get consent and acknowledgment:

In the digital KFS flow, there are multiple ways you can get consent and acknowledgment:

  • Aadhaar eSign (OTP, FaceAuth, Fingerprint, Iris)
  • Smart eSign (Draw signature, upload, select auto-generated signature)
  • Clickwrap (Based on your legal/compliance need)

All these methods are valid by IT Act, 2000 for collecting eSigns from the borrower.

For high-stakes loans where legal enforceability is crucial, you can often prefer robust authentication methods such as Aadhaar eSign.

For lower-risk loans where regulatory compliance is the primary concern, simpler electronic verification methods such as Smart eSign or clickwrap can be opted for.

6. Without the borrower’s explicit consent, lenders cannot charge any fees not mentioned in KFS, ensuring fair practice.

7. Charges recovered from the borrowers by the REs on behalf of third-party service providers on actual basis, such as insurance charges, legal charges etc., shall also form part of the APR and shall be disclosed separately. In all cases wherever the RE is involved in recovering such charges, the receipts and related documents shall be provided to the borrower for each payment, within a reasonable time.

8. Any fees, charges, etc. which are not mentioned in the KFS, cannot be charged by the REs to the borrower at any stage during the term of the loan, without explicit consent of the borrower.

Simply put, if you wish to levy any additional charges that are not mentioned in the KFS document, you will need to have the explicit consent of the borrower.

In all cases wherever the RE is involved in recovering such charges, the receipts and related documents shall be provided to the borrower for each payment, within a reasonable time.

7. Updating loan terms requires consent from both the lender and the borrower.

When modifying loan agreements, it’s essential to follow proper contractual procedures, the process involves creating a new KFS and loan agreement that accurately reflects the proposed changes.

These documents should be presented to the borrower for review and approval.

The borrower’s explicit consent is crucial in this process. It’s important to note that lenders cannot force borrowers to accept new terms.

The borrower has the right to decline any proposed modifications to the original agreement.

In scenarios where a borrower refuses the new terms, lenders must respect this decision. It’s not permissible for the lending institution to unilaterally terminate the loan based solely on the borrower’s rejection of proposed changes.

The original terms of the loan agreement should remain in effect unless both parties agree to modifications.

How to comply with KFS’s new regulations using Contract360

  1. Template Engine: You can easily create pre-build templates where data can be pre-populated as per borrowers’ details and can be easily sent to borrowers for eSign.
  2. Setting up the KFS flow – You can easily set up both of the flows where KFS can be sent separately or together as a KFS loan kit, for borrower to eSign. 
  3. Selecting borrower-preferred language – You can easily build a template and eSigning journey in borrower-preferred language from 13+ local language support for a personalized borrower experience.
  4. KFS Consent and acknowledgment – Borrower can easily review the KFS, simply accept the KFS by acknowledging via eSign, or reject if any discrepancies are found. 
  5. Validity period – You can easily set custom expiry links for borrowers to eSign the agreement.

Using Contract360, you can easily comply with all new KFS regulations within a week.

Contact us to schedule an expert call on how Contract360 can help you comply!

FAQ

Q. What would happen if I’m unable to comply with new KFS regulations?

A. RBI rolled out strict guidelines with a deadline of 1st October 2024.

Incase of non-compliance, RBI can charge a hefty fine or penalty. The new guidelines are mandatory for Banks, Co-op banks, SFB, NBCF, HFC, and MFI.

Using the Contract360, you can seamlessly comply with new KFS rule and be complaint in 1 week.

Get on an expert call

Q. KFS needs to be in a language understood by the borrower. I don’t have the bandwidth to change the language fluency for the borrower.

A. Contract360 provides support to convert your existing KFS into 13+ local languages. With Contract360, you can select the borrower-preferred language to complete the loan execution journey.

With dedicated ESP like eMudhra, you can easily change the consent text in 10+ different vernacular languages as well, providing an end-to-end personalized experience. 

Q. What loans are covered in new KFS regulations that I need to comply with?

A. New KFS regulations suggest all loans including:

  1. Retail Lending by all REs 
  2. Term loans to MSMEs by all REs
  3. Loans by SCBs to individual borrowers 
  4. Digital lending by any regulated entity
  5. Microfinance loans whether by MFIs or other REs

Loan excludes

  1. Credit card debt
  2. Corporate loans

Q. What exactly comprises of retail loan?

A. Retail loans may include all types of loans to individuals, including the following :

  1. Vehicles/Auto loans 
  2. Educational loans
  3. Home Loans
  4. Loan against shares
  5. Loan against property
  6. Loan against fixed deposit, etc.

The retail loan does not include:

  1. Business loans
  2. Lines of credit – as the circular specifically refers to term loans
  3. Loans to corporates (other than MSMEs)
  4. Dealer financing (other than individuals)
  5. Builder Finance (other than individuals)


Q. Is it applicable to an LSP displaying loan information?

A. If LSP is acting on behalf of the lender, and the authority of the lender, what applies to the lender applies to the LSP as well. 

If LSP only has a platform that aggregates lenders and borrowers and provides a digital interface, they are not obliged to adhere to these new guidelines. However, we recommend you know about new regulations if needed to comply in the future.

Q. What are the differences between MITC and KFS?
I’m an HFC, do I need to comply with both?

A. MITC is Most Important Terms and Conditions and KFS is Key Facts Statements. The format of KFS is more focused on interest rates and other charges as well as a few qualitative terms of the loan, whereas MITC provides several other relevant details.

However, there are no new rules for MITC but lenders should prepare MITC as well as KFS in case of home loans.

Q. I am an LSP or digital lending platform. Will I be issuing the new KFS?

A. KFS should be issued by the lender and not the LSP/DL platform.

KFS needs to be reviewed and acknowledged by the borrower by a link sent via verified email ID/SMS/ Whatsapp

In the case of co-lending KFS is issued on behalf of joint lenders 

Penny Drop Verification: Did you receive ₹1 from Signzy in your bank account?

Posted on | by Signzian

Someone transferred Rs 1 to my account through IMPS. Is someone trying to steal the money?
I got a message saying Re. 1 was transferred to my bank account through IMPS. I did not initiate any such transaction. What is it?

What possible fraud could be if someone credited only Re 1 to my bank account through IMPS?
Somebody has deposited an amount in my account through IMPS. My bank statement needs to show his name. Is it possible to know who has sent this amount?

How can I find out who credited money to my bank account through IMPS?
Why have I gotten a message from SBI that ₹1 has been credited to your account through IMPS, even though I have not done any transactions?

You might be trying to figure out why I’ve received ₹1 in my bank account when I haven’t initiated any transaction.

The answer is simple.
Penny Drop verification!

What is Penny Drop Verification?

Penny Drop Verification is a type of method under instant bank account verification that financial institutions use to validate and ownership of a bank account. In this process, a small amount of money is deposited into the specified bank account. The account holder must then confirm the exact amount of this micro-deposit, proving they have access to and control over the account. This helps ensure that the account holder details provided are accurate and that the account is active.

It is a method in bank account verification to diligently determine bank details’ authenticity, validity, and account ownership by entering the bank account number and IFSC code.

Why did you receive ₹1 from Signzy in my bank account?

Let’s understand from an example.

Raj is working in a corporate firm seeking a loan from a leading private bank for his personal use. The bank has already done its KYC process and Raj is waiting for approval from the bank. Meanwhile, the bank as a part of the compliance process, needs to validate the details of his provided bank account to perform bank account verification for account ownership and credibility for the loan payout.

The bank uses this method to verify the bank account details instantly. In this process, the bank transfers a micro-deposit of ₹1 to the bank account to validate the beneficiary name, mobile number, and account status for a loan payout.

It is a type of bank account verification that instantly validates the account ownership and credibility of the bank account details.

The big question: But I haven’t taken a loan from any bank.

Correct. Bank account verification is done by a firm, business, or bank when they need to validate the account’s credibility and account status. There could be multiple reasons why you have received ₹1 in your bank account.

Bank account verification: The Use cases

Banks

Use Case: Customer Onboarding and Account Opening

  • Purpose: To ensure that new customers’ bank accounts are valid and belong to them.
  • Process: During the onboarding process, banks perform bank account verification to deposit a small amount into the customer’s provided account, for account ownership and validity check. 
  • Benefit: Reduces the risk of fraudulent accounts and ensures compliance with KYC (Know Your Customer) regulations and be compliant with regulatory requirements.

Payment Service Providers

Use Case: Merchant and User Account Verification

  • Purpose: Verify merchants’ and users’ bank accounts for secure transactions and payouts.
  • Process: Payment service providers use bank account verification verification to validate the bank accounts linked to their platform. This ensures that the account details provided are correct and that the account is active.
  • Benefit: Enhances the security of the payment process, reducing the risk of payment failures and fraud.

Microfinance Institutions

Use Case: Loan Disbursement

  • Purpose: To confirm the bank accounts of borrowers before disbursing loans.
  • Process: Before releasing funds, microfinance institutions perform bank account verification to ensure the accuracy of the borrower’s account details.
  • Benefit: Prevents disbursing loans to incorrect or fraudulent accounts, ensuring that funds reach the intended recipients.

Wallet Service Providers

Use Case: Linking Bank Accounts for Fund Transfers

  • Purpose: Verifying bank accounts linked to digital wallets for seamless fund transfers and payouts.
  • Process: Wallet service providers use bank account verification to ensure that the linked bank account is valid and controlled by the wallet user.
  • Benefit: Ensures secure and accurate fund transfers between the wallet and bank accounts, improving user trust and platform reliability.

Equity and Investment Firms

Use Case: Investment Account Funding and Withdrawals

  • Purpose: To verify the bank accounts of investors for funding investments and processing withdrawals.
  • Process: Investment firms use bank account verification to validate investor bank details before allowing deposits and withdrawals.
  • Benefit: Reduces the risk of errors and fraud in financial transactions, ensuring that funds are transferred to and from legitimate accounts.

Marketplaces

Use Case: Vendor and Seller Payouts

  • Purpose: To confirm the bank accounts of vendors and sellers for accurate payouts.
  • Process: Marketplaces perform bank account verification for vendors and sellers to ensure that payout information is correct.
  • Benefit: Ensures timely and accurate payouts, improving vendor and seller satisfaction and reducing administrative overhead.

Insurance Companies

Use Case: Policyholder Payouts and Premium Collection

  • Purpose: To verify the bank accounts of policyholders for processing claim payouts and collecting premiums.
  • Process: Insurance companies use bank account verification to confirm the bank details of policyholders, ensuring that transactions are conducted smoothly.
  • Benefit: Ensures that claim payouts are made to the correct accounts and that premium collections are accurately processed, reducing the risk of financial discrepancies and fraud.

Is it legal for Signzy to perform bank account verification without my knowledge?

Signzy works as a verification agency on behalf of banks, investment firms, payment service providers, etc., to ensure the details provided by beneficiaries during the onboarding process, are valid and eliminate any fraud instances of identity theft, account takeover, etc., while being 100% compliant to regulatory laws.

Signzy does not store any sensitive information about its clients. With 100% assurance, we validate bank accounts based on the client’s request and for verification purposes only. 

How to stay protected from fraudulent accounts?

Every time you receive money in your bank account, the amount is displayed in your SMS template to two decimal places. In a hurry or when you’re not focused, you can read Rs 200.00 as Rs 20,000. This is another reason con artists don’t allow you much time to respond to their schemes.

For example: Received Rs 200.00 in your Bank AC X4182 from 123456789@sbi on 29-05-24. UPI Ref: 123456789123.” This is the template of a UPI money received SMS.

Here are some suggestions to avoid falling into this kind of UPI scam:

  • Always double-check your payment requests: Before approving any UPI request, double-check who sent it and whether it is a request to pay or receive money. Be aware of sudden financial requests.
  • Verify sender information: If you receive a payment request from an unfamiliar source or for an unexpected amount, phone or message the sender to confirm their information.
  • Be wary of unwanted texts and collection requests: Scammers frequently send unsolicited messages with misleading or false claims. Do not respond to or authorize any requests without first validating the sender’s identity and the transaction’s purpose.

Key Points to Consider for Bank Account Number Verification in India

Bank account number verification is crucial for protecting individuals and businesses from fraud, ensuring compliance with all regulatory requirements for instant verification, and fostering trust within the financial ecosystem. Despite its apparent simplicity, navigating the complexities of bank account verification in India can be challenging. Here are key considerations:

Guidelines and Best Practices

  • Choosing the Right Method: Select robust verification methods such as API integration to achieve real-time accuracy and enhanced security.
  • Data Accuracy: Prioritize the accurate collection of customer information and thorough document validation to minimize discrepancies and errors.
  • Transparency and Communication: Keep customers informed about the verification process, necessary documentation, and any potential delays.
  • Security Infrastructure: Invest in strong data security measures and adhere to best practices for data protection.

Importance of Accurate Data

  • Fraud Prevention: Implementing instant verification of bank details and ensuring data accuracy reduces the risk of identity theft, financial scams, and money laundering.
  • Streamlined KYC: Accurate information facilitates the Know Your Customer (KYC) process, leading to faster onboarding and smoother transactions.
  • Reduced Financial Losses: Verified accounts result in fewer chargebacks, fraudulent transactions, and disputes.

Bank account verification: New age of account verification

Are you a business, a bank, a PSP, or an investment firm looking for a bank account verification process with account number and IFSC code or UPI handle?

Signzy provides multiple bank account verification methods to ensure account credibility and ownership as per your business requirement, onboarding, and verification process. 

Intelligent auto-routing for penny drop verification

Eliminate the risk of fraudulent accounts with AI-enabled auto-routing during penny testing and know the exact reason for verification failures such as account frozen or closed, perform bulk account verification in one go via simple Excel/CSV upload, utilize our proprietary name match score for additional authentication, and maintain a complete audit trail for transparency and compliance. 

Verify beneficiary account ownership with reverse penny drop

Authentication mechanism for proactive fraud prevention, increase accuracy for real-time account verification, and maintain a complete audit trail for transparency and compliance.

Validate any UPI handle to ensure secure transactions

Instantly verify bank accounts linked with UPI IDs, increase accuracy for real-time account verification, verify accounts on the fly for accurate onboarding and payouts, and perform bulk account verification in one go via simple Excel/CSV upload.

Verify bank details with the IFSC code

Get a weekly updated IFSC code list for instant and accurate verification of bank details, instantly know whether IMPS is enabled, and perform bulk account verification in one go via simple Excel/CSV upload to the system.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

 

Banks

How Signzy Can Help Banks Combat the Rising Tide of Fraud

Posted on | by Signzian

News headlines across India blared: “Banks Recorded Rs 1 Trillion in Fraud-Related Write-Offs.” A staggering figure, it paints a concerning picture of a financial landscape riddled with deceit. While Dinesh Khara, Chairman of State Bank of India, claims the ‘loan write-off era’ is ending, the statistics tell a different story – one of evolving fraudsters and vulnerable systems.

Digging deeper into the data from Business World, we see a worrying shift: private banks now dominate fraud-related write-offs, their share skyrocketing from 12% in 2016 to 74% in 2023. Even more alarming, while the overall number of frauds has gone up, the financial involvement has decreased. This suggests smarter, more sophisticated scams slipping through the cracks.

So, where does hope lie? Enter technology, and with it, Signzy.

The Technological Shield

Traditional fraud detection methods are akin to swatting flies with a newspaper – reactive, inefficient, and ultimately futile. The need of the hour is proactive, intelligent systems that anticipate and thwart fraud before it can wreak havoc. This is where advancements in AI and machine learning take center stage.

Signzy Steps Up:

Signzy’s suite of digital trust solutions utilizes cutting-edge AI and ML algorithms to create an impregnable barrier against fraud. Here’s how:

  • Digital KYC and Onboarding: Verify customer identities in real-time with facial recognition, liveness detection, and document verification. Eliminate fake or stolen identities used for fraudulent activities.
  • Continuous Transaction Monitoring: Analyze every transaction in real-time, flagging suspicious patterns and anomalies that might indicate fraud. Say goodbye to delayed detection and hefty losses.
  • AI-powered Risk Scoring: Build dynamic risk profiles for each customer based on their behavior, transaction history, and external data sources. Proactively identify high-risk individuals and transactions before they can cause damage.
  • Automated Investigation and Alerting: Receive instant alerts for suspicious activity, allowing for swift action and minimizing potential losses. No more time lost in manual investigations.

The Future of Security in Banks

The battle against fraud is a constant evolution, and Signzy is at the forefront. With its commitment to continuous innovation and cutting-edge solutions, Signzy empowers banks to build a future of trust and security. Imagine a financial landscape where:

  • Loan approvals are instant and secure, free from the fear of fraudulent applications.
  • Transactions flow seamlessly, unhindered by the specter of hidden scams.
  • Customer trust thrives, knowing their finances are protected by an invisible yet invincible shield.

This is the future Signzy is building, brick by digital brick. Let’s join hands and create a banking ecosystem where fraud is not a headline, but a distant memory.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

Payment Aggregators

How Signzy Empowers Payment Aggregators in a Licensed Landscape

Posted on | by Signzian

Before we start, let’s know, what are Payment Aggregators? – Payment aggregators are financial entities that facilitate processing of transactions between merchants and customers without the need for multiple direct merchant accounts.

Well, the Indian digital payments scene just got a shot in the arm!

The Reserve Bank of India (RBI) has finally granted Payment Aggregator (PA) licenses to key players like Razorpay and Cashfree, paving the way for a vibrant and regulated ecosystem. This move signifies a significant leap forward for the industry, bringing much-needed clarity and stability.

But with great power comes great responsibility. Obtaining a PA license isn’t just about a celebratory press release. It’s about meeting stringent compliance requirements and ensuring robust merchant onboarding, monitoring, and underwriting practices. This is where the real challenge lies, and this is where Signzy steps in as your trusted partner.

Understanding the Power of a Payment Aggregators License

Remember the days of uncertainty around merchant onboarding and compliance? The PA license puts those concerns to rest. It sets the gold standard for digital payment acceptance, ensuring consumer protection and fostering trust in the system. This is a game-changer for payment aggregators, opening doors to new markets and partnerships, and ultimately, fueling growth.

The Thorny Side of the Rose: Challenges in the New Landscape

While the PA license unlocks opportunities, it also presents its own set of challenges. Let’s face it, the current ecosystem faces hurdles in:

  • Merchant Onboarding: Streamlining the process while ensuring thorough KYC and AML checks.
  • Merchant Monitoring: Keeping a watchful eye on suspicious activity and preventing fraud.
  • Underwriting: Accurately assessing risk and extending credit responsibly.

These challenges can be daunting, but they don’t have to be insurmountable.

Signzy: Your Digital Shield in the Payment Aggreagators Arena

Signzy offers a comprehensive suite of solutions specifically designed to address the challenges faced by payment aggregators in the new PA landscape. We empower you with:

  • Automated Onboarding: Say goodbye to manual paperwork and embrace seamless digital verification with AI-powered KYC and AML tools.
  • Real-time Monitoring: Gain unparalleled visibility into your merchant activity with advanced fraud detection and risk management systems.
  • Data-driven Underwriting: Leverage the power of data and AI to make accurate risk assessments and extend credit with confidence.

Harmony with Regulations and Networks

Signzy’s solutions are meticulously aligned with the latest RBI regulations and payment network standards. We understand the importance of compliance and work closely with regulatory bodies and financial institutions to ensure your operations remain seamless and secure.

Conclusion

The PA license is a watershed moment for the Indian digital payments industry. It unlocks immense potential, but it also demands robust solutions to navigate the challenges. Signzy stands as your trusted partner, empowering you to thrive in this new landscape with cutting-edge technology and a commitment to compliance.

Ready to embrace the future of digital payments? Contact Signzy today and discover how we can help you navigate the PA landscape with confidence and ease. Visit www.signzy.com for more information about us. 

Banking Frauds

Top 5 Emerging Banking Frauds in 2024

Posted on | by Signzian

The Reserve Bank of India reported that in the financial year 2023, bank frauds amounted to more than 302.5 billion Indian rupees, marking a decrease from over 1.3 trillion rupees in 2021. However, the number of bank fraud cases increased to more than 13,000 in 2023, up from the previous year! 

The financial sector in 2024 stands at a pivotal point, balancing on the edge of technological innovation and the rising tide of sophisticated fraud schemes. The digital era has not only transformed the way financial services operate but also how fraud is committed. This shift demands a proactive and knowledgeable approach to safeguard against emerging threats. 

In this comprehensive exploration, we delve into the top five fraud trends anticipated in the financial sector in 2024 and outline robust strategies for their mitigation. 

Deepfake Technology in Identity Fraud

One of the most alarming developments in digital fraud is the use of deepfake technology. Deepfakes, which leverage artificial intelligence to create hyper-realistic but entirely fabricated images and videos, are increasingly being used in identity fraud. Fraudsters can now create convincing fake IDs, or even video calls to impersonate clients or officials, leading to unauthorized access to financial accounts and sensitive information.

In 2023, we witnessed a 30% increase in deepfake-related crimes, and this trend is only expected to rise in 2024. The financial sector, with its reliance on digital identity verification, is particularly vulnerable. The sophistication of these fakes makes them challenging to detect, posing a significant threat to the integrity and security of financial transactions.

Mitigation Strategies:

Combatting deepfake-related fraud requires a multi-faceted approach:

  1. Advanced Detection Technology: Implementing AI-driven verification systems that can detect anomalies and inconsistencies in digital images and videos is crucial. These systems should be trained to recognize the subtle signs of deepfake manipulation.
  2. Biometric Verification: Incorporating biometric data, like fingerprints or retina scans, adds an additional layer of security. Unlike visual representations, biometric data is much harder to replicate or forge.

Sophisticated Phishing Attacks via Artificial Intelligence

In 2024, AI-enhanced phishing attacks are becoming increasingly sophisticated. These attacks use AI to tailor messages and bait that are incredibly convincing and personalized, making them harder to distinguish from genuine communications. Such attacks can result in unauthorized access to sensitive financial data and substantial financial losses.

Mitigation Strategies:

  1. Advanced Email Filtering Solutions: Employ AI-driven email filtering tools that can detect and block sophisticated phishing attempts.
  2. Regular Security Training: Conduct frequent training for employees to recognize and report advanced phishing attempts.
  3. Multi-Factor Authentication (MFA): Implement MFA to add an extra layer of security, reducing the risk of compromised credentials.
  4. Real-Time Monitoring and Response: Establish a 24/7 monitoring system to detect and respond to phishing attacks promptly.

Cross-Border Transaction Frauds

As global financial transactions increase, so do cross-border frauds. These involve complex schemes that exploit differences in regulatory environments across countries, making detection and recovery difficult.

Mitigation Strategies:

  1. International Collaboration: Collaborate with international financial institutions and law enforcement agencies for information sharing and joint efforts in fraud prevention.
  2. Advanced Analytics: Utilize advanced analytics to monitor and analyze cross-border transactions for suspicious patterns.
  3. Customer Verification: Implement stringent customer verification processes for international transactions.
  4. Regulatory Compliance: Ensure strict adherence to international financial regulations to prevent exploitation.

Vulnerabilities in Digital Customer Onboarding and Verification

The shift towards digital customer onboarding in the financial sector, while convenient, has opened up new vulnerabilities. Fraudsters are increasingly exploiting these weaknesses, especially in identity verification and customer due diligence processes. This trend is manifesting in various forms, including synthetic identity fraud and manipulation of digital documentation.

Mitigation Strategies:

  1. Advanced Identity Verification Tools: Leverage cutting-edge technologies like biometric verification and AI-driven document analysis to enhance the accuracy of identity verification.
  2. Ongoing Process Evaluation and Enhancement: Continuously assess and refine digital onboarding processes to address emerging vulnerabilities.
  3. Integration of Diverse Data Sources: Employ multiple and varied data sources to corroborate customer information, strengthening the verification process.

KYC Data Breaches and Manipulation

KYC data is a goldmine for fraudsters. In 2024, there is a growing trend of sophisticated attacks aimed at breaching and manipulating KYC data. These breaches not only threaten customer security but also undermine the credibility of financial institutions.

Mitigation Strategies:

  1. Robust Data Security Measures: Implement and constantly update data encryption and other security measures to protect KYC data.
  2. Regular Security Audits: Conduct frequent and thorough audits of KYC data handling and storage practices.
  3. Advanced Anomaly Detection Systems: Use AI and machine learning-based systems to detect unusual patterns in data access or modification, indicating potential breaches.

Harnessing Signzy’s Expertise to Combat Emerging Fraud Trends

As we navigate through the evolving landscape of financial fraud in 2024, it becomes clear that the challenges are as dynamic as they are daunting. The trends identified – from the misuse of deepfake technology and AI-enhanced phishing attacks to the vulnerabilities in digital customer onboarding and the sophisticated breaches in KYC data – all point towards an urgent need for innovative and robust countermeasures. This is where Signzy’s expertise and solutions become invaluable.

Signzy, with its cutting-edge technological capabilities and deep understanding of the financial sector, is uniquely positioned to address these emerging threats:

  1. Combatting Deepfake and AI-Phishing Threats: Signzy’s advanced AI-driven solutions can play a pivotal role in detecting and neutralizing deepfake manipulations and AI-based phishing attempts. By integrating sophisticated algorithms capable of identifying even the subtlest anomalies, Signzy can provide a crucial layer of defense against these highly advanced fraud techniques.
  2. Securing Digital Customer Onboarding: Signzy’s technology excels in enhancing the security of digital onboarding processes. By utilizing a combination of biometric verification, real-time data analysis, and AI-powered document verification, Signzy can significantly reduce the risk of identity fraud and ensure a secure onboarding experience.
  3. Safeguarding KYC Data: In the face of increasing KYC data breaches, Signzy’s secure data handling and encryption methodologies are essential. By employing rigorous data protection measures and conducting regular security audits, Signzy ensures the integrity and confidentiality of sensitive customer information, thereby fortifying trust and compliance.
  4. Empowering Institutions with Real-Time Analytics and Compliance Tools: Signzy’s real-time analytics and compliance solutions enable financial institutions to stay ahead of fraudsters. By providing advanced tools for monitoring transaction patterns and customer behavior, Signzy aids in promptly detecting and responding to suspicious activities, thereby mitigating potential fraud.
  5. Partnering for a Secure Financial Ecosystem: Signzy’s commitment to collaboration and innovation positions it as a leader in the fight against financial fraud. By partnering with financial institutions, regulatory bodies, and technology experts, Signzy fosters a more secure and resilient financial ecosystem.

Together, let’s turn these challenges into opportunities to build a more secure, trustworthy financial future. The next step in financial security isn’t just about fighting fraud; it’s about pioneering the path forward!

Visit www.signzy.com for more information about us.
Contact us directly!

Combating Subscription Fraud

Combating Subscription Fraud in Telecom

Posted on | by Signzian

In our previous blog, we delved into the complex and challenging world of subscription fraud in the Indian telecom sector, shedding light on its mechanisms and impact. Now, we shift our focus to solutions and strategies. In this blog, we’ll explore the effective measures and innovative approaches that can be employed to combat subscription fraud. From cutting-edge technologies to robust regulatory frameworks, join us as we navigate through the proactive steps that telecom companies, regulators, and consumers can take to safeguard against these fraudulent activities.

In the fast-paced world of digital subscriptions, India has emerged as a fertile ground for opportunity. From streaming services to OTT platforms, e-commerce giants to food delivery apps, the subscription landscape is booming. However, this rapid growth has also attracted unwanted attention – the cunning specter of subscription fraud.

The Grim Reality of Subscription Fraud in India

Subscription fraud manifests in various forms, each aiming to exploit vulnerabilities in the onboarding process. Common tactics include:

  • Synthetic identities: Fraudsters create fake identities using stolen or fabricated data, often including PAN cards, Aadhaar numbers, and even bank account details. These seemingly legitimate identities then trick platforms into granting subscriptions without any intention of future payments.
  • Account Takeover (ATO): Hackers steal existing user credentials and gain access to active subscriptions, racking up charges before the rightful owner realizes the breach.
  • Sim Swapping: By tricking mobile operators into transferring phone numbers associated with subscriptions, fraudsters divert billing notifications and gain unauthorized access.
  • Carding: Stolen credit card information is used to subscribe to services, leaving the rightful cardholder to deal with the financial repercussions.

These fraudulent activities cause significant financial losses, erode trust in digital platforms, and create a negative user experience. A 2021 report by Juniper Research estimated that global subscription fraud will cost businesses a staggering $20 billion by 2025. In India, the problem is particularly acute, with a 2022 report by Experian revealing that 32% of online transactions are attempted using fraudulent data.

Why is India Vulnerable?

Several factors contribute to India’s susceptibility to subscription fraud:

  • Rapid digitization: The rapid adoption of digital services, coupled with a growing tech-savvy population, presents a vast attack surface for fraudsters.
  • Weak KYC norms: Traditional paper-based KYC verification processes are often unreliable and susceptible to manipulation.
  • Financial inclusion: The increasing use of digital wallets and other alternative payment methods creates additional avenues for fraud.
  • Lack of awareness: Many users remain unaware of the red flags and risks associated with online subscriptions, making them easy targets.

How is Signzy Combating Subscription Fraud?

In this scenario, Signzy emerges as a beacon of hope.

Signzy’s AI-powered identity verification platform leverages cutting-edge technologies to combat subscription fraud and safeguard businesses and users alike. Here’s how:

  • Digital Document Verification: Signzy’s solution verifies the authenticity of uploaded documents like PAN cards, Aadhaar numbers, and bank statements in real-time. Advanced checks like liveness detection and document tampering analysis prevent the use of forged documents.
  • Video KYC: Conducting live video KYC through Signzy’s platform verifies a user’s identity by comparing their facial features with their government-issued ID photos. This human-in-the-loop approach offers an extra layer of security.
  • Fraud Screening: By unearthing hidden patterns and assigning a quantifiable risk score, Signzy empowers platforms to make informed decisions and foster a secure and thriving digital ecosystem. In the ongoing battle against subscription fraud, Signzy’s vigilant screening stands as a beacon of hope, ensuring that the light of trust continues to shine on the path of digital progress.
  • Continuous Monitoring: Even after onboarding, Signzy’s solution provides ongoing monitoring of user activity, detecting suspicious transactions and potential ATO attempts in real-time.

Beyond Technology: Building a Collaborative Ecosystem

Tackling subscription fraud requires a multi-pronged approach. Signzy actively collaborates with:

  • Financial institutions: Sharing data and insights to identify and blacklist fraudulent actors.
  • Law enforcement agencies: Providing assistance in tracking down and prosecuting cybercriminals.
  • Industry bodies: Raising awareness about subscription fraud and advocating for stronger KYC norms.
  • Consumers: Educating users about safe online practices and encouraging them to report suspicious activity.

A Brighter Future

By combining cutting-edge technology with collaborative efforts, Signzy is leading the fight against subscription fraud in India. As awareness grows and platforms adopt robust verification processes, the digital landscape will become a safer and more secure space for both businesses and users.

The journey to eradicate subscription fraud is ongoing, but with proactive measures and innovative solutions like Signzy, we can pave the way for a brighter future of trustworthy and secure digital subscriptions in India.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

Dormant Accounts

Dormant Accounts: Tighter Fraud Control by RBI

Posted on | by Signzian

Dormant accounts: Waking up to easier reactivation and tighter security with RBI’s new rules! The Reserve Bank of India (RBI) has introduced new regulations to simplify reactivating dormant bank accounts and tackle fraud risks. Key changes include location-independent KYC submission, video-based customer identification (V-CIP), stricter monitoring, and term deposit reviews. These reforms benefit both account holders (easier reactivation, no fees) and banks (reduced paperwork, fraud prevention).

Let’s dive in!

Reactivating Dormant Accounts Just Got Easier!

Gone are the days of trekking to your original bank branch just to reactivate a dormant account. Under the new rules, you can now submit your KYC documents at any branch, regardless of its location. This flexibility makes the process more convenient and accessible, especially for those who have moved or whose original branch is no longer operational.

For the tech-savvy, the RBI offers a futuristic option: video-customer identification process (V-CIP). If your bank provides this service, you can skip the physical visit altogether and get your account back on track through a secure video call.

But the best part? No more surprise fees or penalties! Banks are prohibited from charging you for the reactivation process itself, and they can’t penalize you for not maintaining a minimum balance in your dormant account. This removes a financial barrier and encourages account holders to bring their neglected funds back into circulation.

Enhanced Security Measures for Dormant Accounts

While simplifying reactivation, the RBI hasn’t forgotten about the lurking threat of fraud in dormant accounts. To combat this, banks are now mandated to conduct annual reviews of accounts that haven’t seen any customer transactions for over a year. This proactive approach helps identify dormant accounts that might be vulnerable to unauthorized access or misuse.

Once an account is reactivated, it will be placed under stricter scrutiny for at least six months. This heightened monitoring, conducted at higher levels within the bank, aims to detect any suspicious activity and nip potential fraud in the bud.

Term Deposits and Zero-Balance Accounts Covered

The RBI’s reach extends beyond just dormant savings accounts. Term deposits, for instance, are also covered under the new regulations. Banks must now review these deposits if you haven’t withdrawn the proceeds or transferred them to another account after maturity. This prevents your funds from slipping into the limbo of unclaimed deposits and ensures you receive what you’re rightfully owed.

Even zero-balance accounts, often used for government schemes and scholarships, receive special consideration. These accounts won’t be classified as “inoperative” even if unused for two years, recognizing their specific purpose and ensuring beneficiaries continue to receive their entitlements.

A Timeline for Dormant Account Reactivation

Mark your calendars! The RBI’s new dormant account regulations take effect April 1, 2024, for all banks, including yours. From forgotten savings accounts to matured term deposits and special zero-balance accounts, it’s time to streamline your processes and ensure compliance.

The Takeaway

The RBI’s new rules for dormant accounts are a win-win for both convenience and security. They make reactivation easier, eliminate unnecessary fees, and provide robust safeguards against fraud. The time to act is now! With April 1, 2024, just around the corner, prepare to welcome a surge in reactivated accounts and unlock their full potential. Dust off those dormant files, partner with Signzy, and watch your business flourish under the RBI’s secure and convenient new regulations.

Signzy VKYC: Seamless Dormant Account Reactivation Under New RBI Rules

The RBI’s new regulations have made revitalizing dormant accounts a breeze, but banks still face challenges verifying customer identities efficiently. This is where Signzy’s VKYC API shines, streamlining the KYC process and making reactivation even smoother.

Imagine a customer walking into any branch across your network, eager to resurrect their long-dormant account. With Signzy’s VKYC API integrated into your system, the process is as simple as a video call. No more mountains of paperwork, no more waiting for physical document verification. The customer simply connects with a representative through a secure video link, presents their ID, and voilà! Their identity is verified in real-time, thanks to Signzy’s AI-powered facial recognition and document authentication.

The benefits for banks are numerous. Reduced paperwork cuts processing costs and turnaround times, leading to happier customers and improved operational efficiency. The real-time verification eliminates fraud risks associated with traditional, document-based methods. Plus, the VKYC API’s flexibility allows integration with existing infrastructure, making implementation seamless and hassle-free.

In a nutshell, Signzy’s VKYC API is the perfect complement to the RBI’s new dormant account regulations. It simplifies reactivation for customers, minimizes risk and cost for banks, and ultimately promotes a more secure and efficient financial ecosystem. So, the next time you’re thinking about dormant accounts, remember that Signzy’s VKYC API can be your key to unlocking a win-win situation for everyone involved.

Subscription Fraud

What is Subscription Fraud in Telecom?

Posted on | by Signzian

In the modern age, where smartphones are extensions of ourselves and data plans fuel our digital lives, the world of telecommunications is a bustling hub of activity. But amidst the convenience and connectivity lurks a shadow – the insidious threat of subscription fraud. This blog delves into the murky depths of this pervasive crime, illuminating its mechanics, consequences, and most importantly, the strategies for effective combat.

Understanding Subscription Fraud

At its core, subscription fraud is a deceptive scheme where individuals obtain telecom services and devices without any intention of paying. They operate like phantoms, exploiting vulnerabilities in onboarding processes and vanishing into thin air, leaving behind a trail of unpaid bills and financial losses for telecom companies.

The Many Faces of a Master of Deception

Subscription fraud manifests in various guises, each a testament to the ingenuity (or perhaps desperation) of the perpetrators. Here are some of the most common forms:

  • Synthetic Identities: Fraudsters craft fake personas using stolen or fabricated data, complete with convincing documentation, to fool verification checks and secure subscriptions.
  • Account Takeover (ATO): Hackers breach existing accounts, hijacking phone numbers and exploiting vulnerabilities to rack up charges before the rightful owner notices.
  • Sim Swapping: By tricking mobile operators into transferring phone numbers, fraudsters divert billing notifications and gain unauthorized access to subscriptions.
  • Carding: Stolen credit card information is used to subscribe to services, leaving the cardholder to shoulder the financial burden.

How Subscription Fraud Breeds More Trouble?

The consequences of subscription fraud extend far beyond unpaid bills. It can:

  • Erode trust: When customers fall victim to fraud, it can damage their trust in telecom providers and the digital ecosystem as a whole.
  • Fuel other scams: Stolen identities and compromised accounts can be used for further fraudulent activities, expanding the reach of the criminal network.
  • Hinder innovation: The financial losses incurred due to fraud can discourage telecom companies from investing in new technologies and services.

Unveiling the Framework

Subscription fraud typically operates within a well-defined framework:

  • Data Acquisition: Fraudsters acquire stolen or fabricated data, including personal information, identity documents, and financial details.
  • Onboarding Manipulation: They exploit loopholes in verification processes to create fake accounts or take over existing ones.
  • Device Procurement: In some cases, they aim to obtain high-end phones or other devices bundled with subscriptions, often reselling them on the black market.
  • Billing Avoidance: They employ various tactics to avoid paying bills, such as disappearing or using stolen payment methods.

Strategies to Combat Subscription Fraud

The battle against subscription fraud requires a multi-pronged approach:

  • Robust Verification: Implementing strong KYC (Know Your Customer) procedures with advanced document verification and liveness detection can deter fraudsters.
  • Behavioral Analytics: Monitoring user behavior during onboarding and usage can reveal suspicious patterns, such as rapid sign-ups or unusual activity.
  • Fraud Scoring: Assigning risk scores based on various data points can help prioritize high-risk accounts for further scrutiny.
  • Collaboration: Sharing information and best practices across the industry, including law enforcement agencies, can help track down and dismantle criminal networks.
  • Customer Education: Raising awareness among customers about the risks of subscription fraud and encouraging them to report suspicious activity is crucial.

Signzy: Fight Against Subscription Fraud

Signzy’s platform leverages advanced technologies like video KYC, document verification, and behavioral analytics to identify and thwart fraudulent attempts in real-time. 

By embracing robust verification processes, collaborative efforts, and innovative technologies like Signzy’s solutions, the telecom industry can create a more secure and trusted landscape for both customers and providers. Together, we can turn the tide against the phantoms of subscription fraud, ensuring that the digital future of telecommunications is one of seamless connectivity, financial stability, and peace of mind.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

Telecommunication Fraud

Telecommunication Fraud: The Top 10

Posted on | by Signzian

Telecommunication fraud in India is a growing concern, with sophisticated scams targeting both providers and consumers. These deceptive practices range from illegal SIM swaps to intricate phishing schemes, costing the economy and individuals significantly. As digital adoption accelerates, so does the urgency for robust fraud detection and prevention measures.

India’s booming telecom sector, with its vast and tech-savvy user base, unfortunately attracts not just legitimate businesses but also cunning fraudsters. These digital demons prey on vulnerabilities in the system, costing telecom companies billions and leaving users bewildered and out of pocket.

Today, we shine a light on the top 10 telecommunication frauds plaguing India, equipping you with the knowledge to outsmart the tricksters and safeguard your mobile experience.

International Revenue Sharing Fraud (IRSF): The most persistent type of Telecommunication fraud!

In IRSF, fraudsters lease premium-rate phone numbers designed to charge high rates for calls. They then illegally access a company’s phone system to call these numbers, racking up large charges that the company unknowingly pays. A portion of these charges is kicked back to the fraudsters. It’s a significant issue for telecom companies because it can lead to enormous unexpected bills and there’s little regulation to help victims recover the costs.

Interconnect Bypass Fraud (SIM Box Fraud):

This occurs when fraudsters use a device called a SIM box to redirect international calls through a different route that costs less. The call is still billed at the higher international rate, but the fraudster only pays a lower cost, keeping the difference. This not only cheats telecom operators out of revenue but often results in poorer call quality for unsuspecting customers.

Telecom Arbitrage Fraud:

Arbitrage fraud in telecommunication exploits the price discrepancies in international call rates. Fraudulent operators act as middlemen, rerouting calls through countries with cheaper rates while charging the original higher rates. They profit from the difference, and this type of fraud can be difficult to trace due to the complex nature of international telecom networks.

PBX Hacking:

Private Branch Exchange (PBX) systems, which many businesses use for their internal phone networks, can be vulnerable to hacking. Fraudsters exploit weak security to gain access and make long-distance or premium-rate calls at the business’s expense. The hacking often goes unnoticed until the business receives an unusually high phone bill.

Traffic Pumping (Access Stimulation):

Local phone companies in rural areas sometimes inflate the volume of incoming calls to their networks. This is to take advantage of the compensation fees they’re entitled to from larger telecom companies. It’s a legal loophole that allows them to claim more money under the guise of increased traffic.

Deposit Fraud:

Deposit fraud is essentially credit card fraud targeting telecom operators’ online stores. Fraudsters use stolen credit card details to purchase prepaid SIM cards or devices. When the actual cardholder disputes the charge, the telecom company must issue a refund, which adds to their losses.

Subscription Fraud – One of the common Telecommunication Frauds

Here, criminals use stolen identities to sign up for phone contracts to get high-end smartphones, which they then unlock and sell. They manage to bypass the Know Your Customer (KYC) checks with fake or stolen IDs, and by the time the fraud is discovered, the fraudster has disappeared with the device.

Account Takeover (ATO):

ATO fraud involves criminals gaining access to existing customer accounts by stealing or guessing login credentials. They can then make unauthorized changes or purchases. This type of fraud is costly to resolve and can severely damage a company’s reputation.

Smishing/SMS Phishing:

Scammers use SMS phishing to trick individuals into revealing personal information by sending deceptive text messages. They often use sophisticated techniques to avoid detection and may even operate illegal marketplaces to sell the data they collect.

SIM Jacking and SIM Swapping:

This fraud involves transferring a victim’s phone number to a new SIM card that the criminal controls. They can intercept text messages and calls, including those containing one-time passwords or two-factor authentication codes, to gain access to the victim’s other accounts and services.

Combating Telecommunication Fraud with Signzy

In the telecom industry, fraudsters often use complex schemes to conceal their identities, utilizing stolen personal information and employing a myriad of strategies to obscure their true intentions. Whether interacting with online shoppers or local carriers, the challenge remains the same.

Signzy offers a solution that allows telecom businesses to thoroughly understand their customers with minimal hassle. Our solutions are designed to provide deep insights into user identities, streamlining the verification process while maintaining user convenience.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

Transaction Monitoring

What is Transaction Monitoring in AML?

Posted on | by Signzian

Transaction Monitoring in Anti-Money Laundering (AML) is a pivotal tool in the fight against financial crime. It involves scrutinizing financial transactions to detect suspicious activities indicative of money laundering. This process not only helps in identifying potential risks but also ensures compliance with increasingly stringent regulatory standards. Understanding its mechanisms and applications is crucial for maintaining the integrity of financial systems.

In today’s global financial landscape, the battle against financial crimes, particularly money laundering, is a top priority for governments, regulatory bodies, and financial institutions. According to the United Nations Office on Drugs and Crime (UNODC), the estimated amount of money laundered globally in one year is 2-5% of global GDP, which translates to $800 billion – $2 trillion. This statistic underscores the cruciality of Anti-Money Laundering (AML) measures. 

The Critical Role of Transaction Monitoring in AML

It is a fundamental component of AML efforts that aims to identify and investigate unusual or suspicious financial activities. Its primary role is to track financial transactions in real-time or retrospectively, analyze patterns, and flag potential red flags that could indicate money laundering, terrorist financing, or other illicit activities. Transaction monitoring acts as the eyes and ears of AML compliance programs, helping to maintain the integrity of the financial system.

Mechanisms of Transaction Monitoring

It relies on sophisticated algorithms and technology-driven processes to scrutinize vast amounts of financial data. Here’s how it works:

Data Collection: Transaction monitoring starts with the collection of transaction data from various sources, including banks, financial institutions, and other relevant entities. This data encompasses a wide range of financial activities, from wire transfers and cash deposits to credit card transactions.

Pattern Recognition: Advanced software is employed to analyze the collected data. These systems utilize predefined rules and algorithms to detect patterns that deviate from the norm. These patterns can include unusually large transactions, frequent international transfers, or transactions involving high-risk jurisdictions.

Alert Generation: When the monitoring system identifies a transaction that matches predefined suspicious patterns or criteria, it generates an alert. These alerts are sent to compliance officers for further investigation.

Investigation and Reporting: Compliance officers review the alerts generated by the system. They conduct in-depth investigations to determine whether the flagged transactions are indeed suspicious or potentially indicative of money laundering or other financial crimes. If warranted, they escalate the case for further action, including reporting to regulatory authorities.

Challenges in Transaction Monitoring:

While it is a powerful tool in the fight against money laundering, it is not without its challenges:

  • The sheer volume of financial transactions can be overwhelming. Monitoring systems must process and analyze massive datasets, which can be a resource-intensive task.
  • Transaction monitoring systems often generate false positives, flagging legitimate transactions as suspicious. This can lead to increased workload for compliance officers and potential delays in processing legitimate transactions.
  • Criminals are constantly evolving their money laundering tactics. They employ increasingly sophisticated methods to evade detection, making it challenging for transaction monitoring systems to keep up.
  • AML regulations are subject to change and vary from one jurisdiction to another. Compliance with these evolving regulations adds complexity to transaction monitoring.

Importance in Preventing Financial Crimes

Transaction monitoring plays a crucial role in preventing financial crimes, and its importance cannot be overstated:

  • Transaction monitoring helps detect unusual or suspicious activities that may be indicative of money laundering, terrorist financing, or other financial crimes. 
  • The knowledge that transactions are being actively monitored acts as a deterrent to would-be money launderers and criminals. The risk of being caught discourages illicit financial activities.
  • Financial institutions are legally obligated to comply with AML regulations. Effective transaction monitoring helps institutions fulfill their compliance obligations. This reduces the risk of regulatory penalties and reputational damage.
  • The Financial Action Task Force (FATF) states that transaction monitoring is a key component of a robust AML/CFT (Countering the Financing of Terrorism) regime and emphasizes its importance in mitigating financial crime risks.

Conclusion

Transaction monitoring is the vigilant guardian of the financial system. Its sophisticated mechanisms, fueled by advanced technology and intelligent algorithms, play a crucial role in identifying and preventing financial crimes like money laundering, terrorist financing, and fraud.

As statistics show, the global financial system is vulnerable to these crimes, with money laundering alone estimated to reach a staggering $1.6 trillion annually. This alarming trend underscores the critical need for robust transaction monitoring systems.

Signzy’s Data Breach API serves as a powerful shield in this fight. This innovative tool provides real-time insights into data breaches, enabling financial institutions to verify the integrity of customer information and identify potential threats. By integrating the Data Breach API into their transaction monitoring systems, institutions can identify compromised credentials, prevent fraudulent transactions, and enhance compliance. Protecting sensitive data is paramount in today’s digital landscape, and Signzy’s Data Breach API is your ally in this endeavor. 

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

1 2 3 4 5 6 … 25