The views and opinions expressed in this article are those of the thought leaders as individuals, and are not attributed to CeFPro or any particular organization.
By Julian Horky, Vice President, Head of Risk Controlling, Berenberg Capital Markets
How does implementing a Trade Surveillance Program aid in increased fraud detection
A good trade surveillance program improves fraud detection while lowering costs. But why do businesses even struggle with fraud detection? More regulatory pressure and new fraud strategies challenge banks and require agile fraud detection processes. A common mistake is to throw bodies at these challenges. The latest regulations, such as MiFID II, MAR, and US Dodd-Frank, were countered with more compliance and risk staff. However, the situation is getting worse by the year as regulations keep getting more complex. Additionally, regulations will only get more rigorous in the next decades – just look at the previous five decades. As a result, building more agile fraud detection capabilities is a better alternative than raising compliance and risk costs every year.
A good trade surveillance program enables such enhanced fraud detection capabilities. Like sharpening an axe before chopping down trees, it makes every step that follows easier – whether it’s data gathering, model development, analysis, automation, controls, or everything else you may think of. Fraud detection processes that rest on a sound trade surveillance program are more effective, more efficient, and need less human intervention. So, in my opinion, a trade surveillance program is really about providing the foundation and the framework to enable simple, effective, and agile fraud detection.
