FRAUD SERVICES

  Jolly Strategic Advisors (JSA) was recently chosen to conduct an independent review for an international payments organisation into its fraud and risk policy framework as part of a request on behalf of a card scheme audit. For this review, JSA looked at their ongoing merchant monitoring.

A representative sample from their current merchant base was selected, including various merchant types and risk profiles.

The client demonstrated an in-depth knowledge of the key onboarding principles, and they applied due diligence thoroughly. Some gaps were identified at the onset of the review: There was a heavy dependence on paper-based document collection and manual processes, which made it a slow and cumbersome operation. As an external party, JSA became conscious of this department's lack of audit readiness.

JSA discovered that the ongoing maintenance of the merchant details relied heavily on their customer's proactive submission of any changes, including ownership, structure or locations. AJC found that the client’s sales-driven focus gave limited resources for structured periodical reviews.

The overall policy and process framework suffered from limited cohesion between departments. Some procedures were diluted across numerous addendums. It became apparent that the business department relied on a limited number of key staff members. This presented an undue risk of potential loss of expertise should those individuals leave the company.

In addition, when reviewing certain high-risk models, it was discovered that disproportionately high volumes of transactions were relevant to jurisdictions outside of the approved zone of operation and in direct conflict with the licensing agreements in place. JSA highlighted these exceptions could result in a breach of certain merchant location programmes within card scheme rules.

During system demonstrations, it became clear our client had invested significant resources in authorisation and airline monitoring. These areas of excellence directly contrast with manually driven operational areas such as onboarding and merchant deposit monitoring. Further deep dive into fast-track system usage suggested there were missed opportunities in terms of rules that could better indicate risks of money laundering, propensity of human trafficking routes and misuse of pre-paid products.

It was also noted that the client fast tracks their low-risk applications through an online portal. JSA felt this facility was an untapped potential and should be used for all applications. This would capitalise on the existing online document submission process and potentially address the manual paper-based management.

JSA demonstrated its, introduce expertise to fulfil the client’s needs to demonstrate their short to medium-term commitments to address the shortfalls identified during the reintroduction of a structured suite of policies and processes to support the risk business area effectively secondly by documenting long-term commitments in the form of an IT roadmap promoting the integration of the disjointed risk areas and their enhancements through automation where applicable.