Startup Check-In

Jewel Paymentech: Automatic Anomaly Detection Is The Best AML

For everyone in the world except the U.S. (and even for some sports fans within the U.S.), it’s football season. The World Cup is well underway, and people are eager to watch their favorite teams play. They’re also eager to put their money on certain outcomes through online gambling.

Jewel Paymentech CEO Sean Lam says activity in the online gambling space has heated up more than 300 percent in the last 30 days, especially in the week and a half since the World Cup began. He said there’s a lot of underground activity of criminals trying to get payment acceptance to power illegal digital gambling activities, and that has meant an uptick in alerts for the startup.

Alerts are produced when anomalous transactions point to potential transaction laundering. Although Jewel itself doesn’t catch any bad guys, Lam said the startup plays a critical role in detecting them so that organizations and governments can decide how to react. It’s the first step in safeguarding payment gateways, payment facilitators, and acquiring banks.

Lam explained that Jewel’s technology looks at activities and behaviors behind transactions. If transactions are coming from an illegal merchant, then patterns will be different, he said.

For example, a legitimate online shoe shop may be selling footwear to a localized customer base at prices ranging between $20 and $100. But if transactions start coming in from all over the world and ticket sizes are way out of bounds from what the regular prices on the site appear to be, Lam said that can be a telltale sign that the website is actually a front for illegal activity.

Another common tactic that Lam has observed across regions is the white-labeled Android app. Money launderers will publish an Android application and obscure the identity of the actual Telco behind it. These apps, said Lam, are as much of a mule as the front website and are being used to update online gambling eWallets or place bets.

Lam said money launderers are all looking for the same thing: A bank that will onboard them quickly without asking too many questions. All they need is the ability to process a basic Visa card. Their activity tends to focus on smaller banks, which can lag their larger counterparts when it comes to tech.

Therefore, holistic and automated KYC (Know Your Customer) tools are critical, said Lam. This enables banks, facilitators and gateways to continue onboarding merchants quickly, yet still detect red flags that could signal shady activity.

“Banks need to automatically detect anomalies, or they’re going to miss them,” Lam cautioned. “If they haven’t already thought about these issues, it’s time to take a look.”


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.