How to protect funds from unauthorised withdrawals?

A report by Crowev, reveals over 1.6 million 'lost' individual pension funds, with a cumulative value of approximately £20 billion. Turning our attention to Asia, Malaysia faces a pressing issue as the Macau Scam syndicate orchestrates unauthorised withdrawals, totalling over RM3 million from Tabung Haji accounts. Singapore, too, grapples with the challenge, with nine cases of unauthorised CPF withdrawals leading to a loss of SGD124,000. These incidents underscore the need for heightened vigilance against unauthorised fund activities.

Fund-based organisations play a vital role in managing the financial security and well-being of their members. However, one of the critical challenges they face is unauthorised withdrawals, often executed "on behalf" of account holders. In this blog, we will explore the specific issue of "Withdraw on Behalf" fraud and how fund-based organisations can take proactive measures to protect the financial futures of their members.

The challenge: "Withdraw on Behalf" fraud

Unauthorised withdrawals executed "on behalf" of account holders are a growing concern for fund-based organisations. This type of fraud can have severe consequences:

• Financial Impact: Unauthorised withdrawals can deplete retirement savings, leaving account holders facing financial hardships during their retirement years.
• Complex Perpetrators: Perpetrators of "Withdraw on Behalf" fraud often use sophisticated methods, including identity theft and document forgery, making detection challenging.
• Trust Erosion: Such fraud erodes trust in fund-based organisations, potentially damaging their reputation and causing members to question the safety of their investments.

Safeguarding funds from unauthorised withdrawals

To protect the financial security of their members, fund-based organisations can implement the following measures to prevent "Withdraw on Behalf" fraud:

• Enhance Security Protocols: Implement robust identity verification methods, such as biometric authentication and multi-factor authentication, to ensure that only authorised individuals can access and make withdrawals from accounts.
• Continuous Monitoring: Employ real-time account monitoring systems that detect unusual activity patterns and trigger alerts when potentially fraudulent transactions occur. This proactive approach can identify evolving fraudulent behavioural patterns, complementing rule-based detection.
• Documentation Verification: Thoroughly scrutinise withdrawal requests and documentation to verify their authenticity, ensuring the legitimacy of any third parties claiming to act on behalf of account holders. This step minimises the risk of unauthorised access to funds.
• Member Education: Raise awareness among members about the risks of "Withdraw on Behalf" fraud. Educate them about the importance of safeguarding their account information and being cautious when granting access to third parties.
• Immediate Response Protocol: Establish a clear and rapid response policy for handling suspected fraud cases. The ability to intervene quickly can minimise financial losses and protect the interests of members.

Fund-based organisations have a responsibility to ensure the safety and security of their members' funds. By implementing advanced security measures, educating members, and having a swift response protocol in place, these organizations can protect members from the potentially devastating impact of unauthorised withdrawals and fraud. Together, we can ensure the members enjoy their well-deserved investment with peace of mind, free from the damaging effects of such financial fraud.

GBG’s digital transaction fraud prevention solution serves as a robust defence mechanism against unauthorised fund withdrawal and account takeover. Utilising advanced machine learning, it proactively identifies anomalies within customer transaction patterns, enabling the early detection of potentially fraudulent activities. By incorporating transaction device intelligence, the solution adds an extra layer of protection, specifically targeting and deterring identity fraud. By establishing baselines for normal account behaviour, the solution adapts to the unique challenges of fund accounts, providing comprehensive protection against unauthorised fund withdrawals. With real-time monitoring, immediate alerts, and integration with external intelligence sources, our solution offers a dynamic and proactive defence, reinforcing the security of users' investment portfolios.

Speak to our experts to find out how GBG can help you ensure the safety and security of your members’ funds against unauthorised withdrawals. Or for more information, check on GBG’s digital transaction fraud prevention solution.