Ever paid for something online, used your phone for banking, or bought some cryptocurrency? These services were made possible by fintech companies. Financial technology is revolutionizing the way we process and deal with monetary transactions across the globe. Though beneficial, running a fintech company is quite taxing. From managing customers’ privacy and security of your platform, to ensuring AML compliance, there’s a lot to do to avoid putting your business and those of others at risk.

Consequently, one good way many fintech companies try to prevent internet scamming is by creating and implementing KYC and AML solutions or partnering with KYC service providers to manage that aspect of their business. Preventing online fraud by cyber scammers, complying with AML regulations, and KYC policies all help with retaining customers’ trust. Here are 9 ways fintech companies can prevent fraud and keep their platforms secure.


1. Implementation of KYC Process:

KYC involves collecting information on customers during the onboarding process. It is a Customer Due Diligence (CDD) that fintech companies ought to undergo to ensure a customer is who they say they are. This involves performing checks, validating documents, and monitoring the customers’ accounts for any suspicious activities.

Some tech companies build an in-house KYC team, others seek the services of an ID verification provider that is compliant with AML regulations, covers their target region(s) and offers features that meet their specific needs. 

2. Having an AML compliance department:

With a KYC service provider, fintech companies can still have an AML department. This department reviews flagged identities from the KYC provider or from the in-house KYC team to determine what further actions to take. For instance, a customer could be flagged as a PEP or as one requiring additional checks and documents. The AML department can carry out manual reviews to determine whether to accept this customer, monitor or reject them. The AML department also educates the company’s staff on AML regulations and policies for a frictionless workflow.

3. Carrying Out Transaction Monitoring:

Part of AML and KYC processes is transaction monitoring. This can help determine if a transaction is fraudulent, perhaps after noticing unusual or suspicious activities in an account or transaction. 

Details such as number of transactions, volume, and location are some activities that can trigger transaction monitoring. For instance, when the information from a customer says America, and transactions are noticed from somewhere in Asia, it should be flagged as suspicious and monitored. If necessary, suspend the account until a liveness check or identity re-authentication is done.

4. Website/Platform Auditing for Safety.

An IBM research reports that financial service providers have been the most targeted by cyber scammers for the last three years consecutively. Cyber attacks carried out on fintech platforms aim at gaining access to customers data, company’s product or general disruption of operations.

Adoption of proactive cybersecurity such as pen-testing offers fintech companies a way to reduce their risk in the digital world and prevent internet scamming from occurring.

Pen-testing is a simulated authorized attack on the security of a platform, in order to determine the strength of the security system in place for proper risk analysis. Once done, you realize what loopholes there are and propose solutions to them immediately.

5. Ongoing monitoring for Politically Exposed Persons (PEP):

Transactions by PEPs should be monitored due to their access to public funds. Additional checks should be carried out on them due to the position they occupy, and even after their status changes. 

This sort of enhanced due diligence involves determining the title and details the PEP holds or held in the past, analyzing the source of their funds or transactions, and ensuring they are not using your fintech platform for money laundering.

6. Education of Customers:                                     

Blog posts on money laundering prevention tips can help educate customers about online fraud carried out by cybercriminals. It’s also helpful to educate them on why you are collecting the data you are as part of your KYC process. Webinars and other interactive services provide customers with a platform where they can ask questions and get answers in real-time. You can also create alerts to inform customers about redlines such as use of public Wi-Fi for financial transactions and banking card exposure.

7. Maintain Internal Controls

Maintaining internal controls in a financial institution is an important business responsibility for fraud prevention. Fintech Companies should limit access to financial account data as well as inventory data by maintaining internal controls protocol such as implementation of preventive and detective controls.

Preventive controls help stop online fraud from happening by employing thorough documentation and authorisation practices. Verification of expenses, authorizing invoices and limiting physical access to cash should be maintained in a financial institution. Just one individual should not be in charge of financial records or assets.

In cases where fraud has occurred, detective control involving finding issues and causes of the fraud, should be embarked on. This helps prevent reoccurence.

8. Know your Employee:

Internal fraud is one area that is sometimes ignored by certain fintech companies. Online fraud can also be prevented when you know who you employ. Hiring experts does not relegate additional checks, if they have a questionable background. When done during recruitment, proper orientation should also be carried not just for the employee to understand their job roles but also understand the company’s stand and strategies in regards to money laundering.

Behavioral changes in employees can also be monitored and prevent any likelihood of fraudulent actions.


As cyber scammers grow increasingly smart, skilled and equipped with the know-how of evading and breaching financial platforms, the demand by fintech companies to improve security systems and prevent fraud has geometrically progressed over time.

The services that Financial Institutions render cannot be overemphasized, as the adequate implementation of measures needed to avoid fraud issues is important to sustain these services. These tips will not only help you prevent fraud right now but also grow customer’s trust in the long term

Fintech companies understand the importance of their services to the populace and, as such, are providing adequate measures, and undergoing research and innovation to provide adequate solutions that will curb bad actors..