Fiserv boosts its fraud prevention service in Africa

FORTUNE 500 company Fiserv, which has 16,000 clients worldwide and a $5bn revenue stream, is taking aim at growing its fraud-prevention business in Africa, which faces increased incidences of money laundering and fraud.

Many companies in Africa stand to lose out on lucrative US business if they do not abide by new US rules for dealing with US citizens from next year, with many banks in Africa not yet seen ready for the change.

Solutions plugged into the systems of banks — including in SA — are becoming more important as companies will be obliged to identify all US customers they deal with from next year, which could be any US citizen or even someone who spent more than 180 days in the US. Many African banks do not yet have systems in place to meet these requirements.

“If they are not compliant, they will not be able to do business with banks in the US,” said Christopher Ghenne from Fiserv at the Association for Savings and Investment SA conference in Durban yesterday.

Software to deal with the new rules of the Foreign Account Tax Compliant Act was a big investment, but it depended on the size of the bank, he said.

The changes will place the onus on a US bank to report to the country’s internal revenue service that foreign banks are compliant, and executives could go to jail if they do not comply. The move on the Foreign Account Tax Compliant Act was announced about 18 months ago in the US and it was hoped compliance could apply from this year, but this has been postponed to early next year.

Bernard Jacobs, head of Empirica in SA, which provides Fiserv products, said there had been “very good” growth for their software solution products, which cover antimoney laundering, fraud prevention software all the way to King 3, in SA over the past 13 months, mainly at the top to medium tier of the market.

The PwC global economic crime survey, which includes responses from 700 bankers, found that the categories “high dependence on technology, criminality and fraud” ranked much higher in SA than globally.

“SA is waking up faster than the rest of Africa in terms of financial crime,” said Mr Ghenne. “There is much more awareness that software can help faster than not having the software.”

South African banking executives were found in the survey to be concerned about the costs of fighting fraud and financial crime.

According to the Association of Certified Fraud Specialists, 60% of internal fraud “related to external fraud” and only 10% of internal fraud is detected.

It takes an average of 18 months to detect it.

At a centralised level, Fiserv systems would put high frequency and suspicious transactions into a model that provides alerts.

“We are seeing these types of transactions all over the world at many financial institutions,” said Mr Ghenne.

He said money laundering was growing as a problem in Africa as the continent opened up to the rest of world, but some countries in Africa “deny they have a fraud problem”.

“It is important to build libraries of scenarios and then to identify the most important scenarios for companies.

“You can have fraud going on for years. Too many companies believe internal fraud is not happening,” he said.

Costs when companies get caught on the international stage can be significant — HSBC had to pay a $1.9bn fine last year, according to Mr Ghenne.