November 27, 2022

Volume XII, Number 331

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Financial Cybercrime: Fraud-Prevention Resources for Online Lenders

Several resources exist—and are receiving renewed attention—to combat fraud committed during the online-lending process.  With cybercrime on the rise, the non-profit National Cyber-Forensics & Training Alliance (“NCFTA”) announced earlier this year that it was opening offices in financial centers New York and Los Angeles.  The NCFTA conducts real-time information sharing and analysis with experts in the public, private, and academic sectors, with its Cyber Financial Program specifically dedicated to identifying and neutralizing cyber threats to the financial services industry from malware, phishing, social engineering, and other computer-aided or fraudulent methods.  In October 2016, TransUnion launched the Fraud Prevention Exchange, an industry collaborative where reports of prior fraud and ongoing high-velocity applications are shared to help show what identities and devices may be compromised and—knowingly or unknowingly—participating in fraud.  Several other industry players got involved in the Online Lending Network later that month to share data on when they received applications or funded loans to assist in combatting loan stacking and excessive credit risk.

The Financial Crimes Enforcement Network (“FinCEN”) works under the parameters of Section 314(b) of the USA PATRIOT Act to assist financial institutions in sharing information with one another to identify and report activities that may involve money laundering or terrorist activity.  FinCEN has “strongly encouraged” voluntary information sharing under 314(b)’s safe harbor to boost customer-due-diligence programs, bring more transparency to convoluted financial trails, and alert financial institutions to known bad actors they may not have encountered yet.

These same reasons support increased and real-time sharing of fraud-prevention data between financial institutions, particularly in the online-lending industry that is growing and speedy.  As the industry matures, it seems destined for collaboration on fraud-prevention issues.

Copyright 2022 K & L GatesNational Law Review, Volume VI, Number 319
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About this Author

Joseph A. Valenti, KL Gates, Cybercrime Lawyer, Financial Regulation Attorney, FinTech
Associate

Mr. Valenti focuses his practice on regulatory compliance, internal investigations, and litigation. Many of his clients are involved with financial services, government contracting, health care, energy, information technology, or media. 

He assists clients in settling or litigating cases involving a government party, focusing particularly on white-collar criminal defense. He also has experience with parallel proceedings, standalone civil or administrative enforcement actions, and cases involving civil-rights violations or misconduct by federal...

412-355-8398
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