Fraud Definitions Overview - FedPayments Improvement€¦ · Fraud Definitions Work Group and Community Interest Group Federal Reserve Webinar January 31, 2019 Ken Montgomery First

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Federal Reserve Actions for Payment Security Fraud Definitions Work Group and

Community Interest GroupFederal Reserve Webinar

January 31, 2019

Ken MontgomeryFirst Vice President & COO, Federal Reserve Bank of BostonPayments Security Strategy Leader, Federal Reserve System

Tim BoikeVice President, Industry Relations

Andrés RapelaAssistant Vice President, Secure Payments


Payments Security: Fraud Definitions

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Welcoming Remarks

Work Group Overview

Work Group Recruitment and Community Interest Group Overview

Open for Audience Questions

Closing Remarks

Webinar Agenda



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Fraud Definitions Work Group Overview and Approach



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Inconsistent availability and classification of payments fraud data limits the effective, efficient, and timely cross-industry sharing of fraud patterns, trends, and losses; a contributing factor to missed fraud mitigation opportunities

INDUSTRY CHALLENGE

OPPORTUNITYImprove fraud data consistency to enable more effective, efficient and timely

collection and sharingOptimize communication across the industry on payments fraud to maximize

understanding and potentially enable more timely reporting and mitigation actionsFocus effort on ACH, wire, and check fraud taxonomy given inconsistent

availability of fraud data across payment types and industry interest in improvements

The Federal Reserve commissioned secondary research that identified inconsistencies in the classification and reporting of payments fraud data from study to study, and noted a significant lag between the reporting

period and when study results become available.

Current Industry Challenge and Opportunity



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Various Fraud Taxonomies for Research, Processing, and Fraud Analysis

FIs / Corporates

Researchers

Processors

Level 4 – Fraud Sub-type(not exhaustive; flexible)

Level 3 - Fraud Type

Level 2 – Broad Category(exhaustive)

ACH Fraud

Third Party Fraud

BEC ATO ETC.

First Party Fraud

Social Engineering

Internal / Insider ETC.

Industry-Aligned Fraud Classification Model*

Mapped into consistent fraudclassification structure for

aggregate analysis, informationsharing, & mitigation

priorities

Aggregate Fraud Profiles

Information**

Industry Fed Gov.* Example only; 4-level model/structure derived from: “Developing a Taxonomy for Measuring Fraud” presentation at Philadelphia Reserve Bank Conference, November 29th, U.S. Department of Justice, Bureau of Justice Statistics.

** Known and emerging fraud profiles information only; no customer or PII data shared

EvolutionaryAdoption

Desired OutcomeVision for a Consistent Payments Fraud Classification Model



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A greater understanding of payments system fraud trends is essential for mitigating risk. The Federal Reserve sees value in evolving towards a more consistent and holistic U.S. fraud

perspective through a collaborative approach with industry professionals.

In its pursuit of this objective, the Fed is establishing and leading a Fraud Definitions Work Group that will:

‒ Bring together relevant expertise and diversity of thought from across the payments industry;

‒ Develop a fraud classifications model to help the industry more quickly identify fraud trends in ACH, wire and check transactions and;

‒ Propose a roadmap to encourage broad industry adoption of its recommended model

Fraud Definitions Work Group



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Work Group Member Activities• Contributes to refinement of proposed work effort

(scope, milestones, work plan, key deliverables, etc.)

• Communicates and seeks input within organization on key decision points

• Socializes work efforts with constituents within industry and professional networks

• Participates actively, constructively and consistently in meetings and follows through on action items to drive the work to successful outcome

Projected Time Commitment• Work group duration– ~9 to 12 months• In-person meetings – 3 to 4 (1.5 days each) • Teleconference calls – Biweekly (1 to 2 hours)• Subcommittee work efforts – as needed (1 to 2

hours/week)

Work Group Activities and Projected Time Commitment



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Work Group Recruitment and Community Interest Group



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FPI Community

FPI Fraud Definitions Community

Interest Group

Fraud Definitions

Work Group

FedPayments Improvement (FPI) CommunityAll ~4,800 Subscribers

FPI Fraud Definitions Community Interest GroupSubset of FPI Community members interested in the fraud definitions topic (~200) and applicants not selected to participate in the work group

Fraud Definitions Industry Work Group Small, nimble working group of industry leaders with specific industry expertise

Varying Levels of Engagement Available to the IndustryOpportunities will exist for all payment industry stakeholders to be engaged and

share their input on the final deliverables through different methods.



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For this small, nimble work group we are seeking 20-30 industry participants who have familiarity and functional expertise in one or more of the following disciplines:

Institutional Fraud

Governance

Fraud Operations

and Strategy

ACH, Wire and Check Operations

Fraud Systems

Technology

Risk Intelligence

and Analytics (Data Collection and Reporting)

Desired Requirements of Work Group Participants



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Submitting Your Expression of InterestYou can locate the expression of interest form on FedPaymentsImprovement.org

https://fedpaymentsimprovement.org/strategic-initiatives/payments-security/fraud-definitions-work-group/



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This group will have the opportunity to:

Join the Fraud Definitions Community Interest Group by submitting or updating your FedPayments Improvement Community profile and selecting “ACH, Wire and Check Fraud

Definitions” as a topic of interest.

Participate in input and feedback opportunities prior to the broader FPI Community

Obtain regular updates on work group progress

Invited to meet with Fed SMEs and/or work group members via teleconferences

FedPayments Improvement Fraud Definitions Community Interest Group

https://fedpaymentsimprovement.org/the-community/about-the-community/



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Expression of Interest: Stakeholders interested in participating on the work group must submit an expression of interest form by February 14.

Work Group Establishment: The Federal Reserve will select participants from the pool of interested candidates to ensure diverse stakeholder representation and strong expertise across the many needed disciplinesby mid-March.

Fraud Definitions Community Interest Group: Stakeholders may join this group at any time during the work group efforts by updating their FedPayments Improvement Community Profile. Individuals not selected for the work group will consult on the work as part of the Fraud Definitions Community Interest Group.

Visit FedPaymentsImprovement.org to learn more or reach out to us at [email protected]

Next Steps

mailto:[email protected]



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Questions

Questions?

Documents

Fraud Definitions Overview - FedPayments Improvement€¦ · Fraud Definitions Work Group and Community Interest Group Federal Reserve Webinar January 31, 2019 Ken Montgomery First