Financial crime is evolving at a relentless pace, with payment fraud becoming increasingly sophisticated and harder to detect. As payments infrastructure becomes more complex, so too do the risks.
UK Finance revealed that during the first half of 2024, payment fraud saw a significant evolution, with criminals stealing over £570 million, while banks prevented over £710 million in unauthorised fraud.
That’s why a proactive, collaborative, and technology-driven approach is essential.
In this post, Patrick Green, Head of AML and UK MLRO at Banking Circle, explains how his team of AML and fincrime professionals is using artificial intelligence (AI), advanced behavioural analytics, and Banking Circle’s virtual IBAN (vIBAN) infrastructure to protect the financial ecosystem from criminal activity.
The evolving threat of financial crime
With AI being leveraged in more and more ways to commit fraud, criminals can now use tactics that are both highly sophisticated and difficult to detect using traditional tools.
To combat this, Banking Circle is using its own AI and machine learning models to monitor behaviour rather than just static rules. This enables the detection of unusual transaction patterns and anomalies in real time.
“AI and machine learning have been part of the financial crime prevention toolkit for over five years, but the real evolution lies in using generative AI and behavioural analytics. We’ve moved beyond static rules-based models to a system that dynamically analyses transaction patterns, identifies anomalies, and adapts to evolving threats. By integrating this technology into our transaction monitoring processes, we’re able to respond to potential risks faster and more effectively.”
This technology is supported by a strong commitment to industry collaboration.
“We believe that collaboration is key to staying ahead of financial crime. Our intelligence and investigations teams work closely with PSPs, regulated financial institutions, and law enforcement agencies to identify emerging typologies and fraudulent patterns. This collaborative approach enables us to not only react to suspicious activity but also to anticipate and prevent it before it becomes a larger issue.”
How virtual IBANs are enhancing financial crime prevention
Virtual IBANs offer significant benefits for payments innovation and flexibility, but they are also vulnerable to misuse if not properly monitored.
“Virtual IBANs often receive a lot of attention due to concerns around potential misuse for money laundering and fraud. To counter these perceptions, we’ve built a robust virtual IBAN screening tool that proactively identifies risks before funds move through the system. This initiative ensures that our clients have a safer, more transparent environment to operate in, while also demonstrating to regulators and industry peers that we’re taking the right steps to mitigate these risks.”
The in-house VIBAN screening tool was developed in partnership with Banking Circle’s data science and AML teams.
“We’ve recently launched a virtual IBAN screening tool, built in collaboration with our data science and AML teams, to bring potential risks to the forefront. This tool allows us to screen virtual IBANs upfront, significantly reducing the reliance on downstream sanction screening after the transaction has occurred. By identifying risks earlier, we’re able to provide a higher level of security and transparency for our clients.”
Why proactive screening of virtual IBANs matters
Traditional approaches often detect risk only once a transaction has been processed. By that point, fraud may already have occurred. Banking Circle’s solution brings risk identification forward in the timeline.
“We built this virtual IBAN screening tool in-house, which means that we can effectively screen upfront versus wait until the transaction hits us, bringing risks to the forefront.”
By identifying suspicious flows before money moves, the organisation greatly reduces the potential for fraudulent activity and enhances transparency throughout the process.
Collaboration with clients and regulators to mitigate VIBAN risks
Proactive fraud prevention isn’t only about internal controls. Banking Circle is also supporting clients with their own compliance journeys.
“It’s something that we’re also speaking to our clients about in terms of how we can utilise that to also help with their own prevention of financial crime.”
In addition, Banking Circle works closely with regulators across jurisdictions, contributing to public-private partnerships and participating in industry forums to help shape future frameworks.
“Regulatory expectations have become more localised in recent years, creating challenges for financial institutions operating across multiple jurisdictions. At Banking Circle, we’ve invested significant time in building relationships with our clients and regulators to ensure consistency in compliance, regardless of where our clients are operating. By contributing to public-private partnerships and industry forums, we not only stay aligned with market peers but also provide valuable insights that help shape future regulatory frameworks.”
Supporting clients with tailored fraud prevention frameworks
Banking Circle serves a broad client base, from pre-licensing startups to large, established institutions. The approach is always tailored to individual needs.
“We work with a wide range of clients, from startups in the pre-licensing stage to well-established global institutions. Each client’s needs are different, and we tailor our guidance accordingly. For newer clients, we focus on helping them build strong frameworks that meet regulatory requirements, while for more experienced clients, we engage in forward-looking conversations about upcoming regulatory trends and how they can future-proof their operations.”
The goal is to empower clients to strengthen their own defences, creating a safer financial ecosystem for all.
Real-world success in fraud prevention through VIBAN screening
Banking Circle’s screening tool has already delivered results. In collaboration with Italian Financial Intelligence Units (FIUs), the organisation identified suspicious transaction flows between Europe and Asia, uncovering a large fraud operation.
“Our intelligence and investigations teams recently identified suspicious flows between Europe and Asia that were part of a larger fraud ring. By collaborating with our clients and industry peers, we were able to share insights and help other financial institutions recognise and mitigate similar patterns. This proactive approach not only helped protect our clients but also contributed to strengthening the overall financial crime prevention ecosystem.”
This success was made possible by a combination of innovative technology, deep expertise, and collaborative partnerships with clients and law enforcement.
What’s next for virtual IBANs and financial crime prevention?
Looking ahead, Banking Circle plans to expand the capabilities of its VIBAN screening tool to cover more geographies and support more complex risk assessments. The continued integration of AI and behavioural analytics will further improve the organisation’s ability to detect and prevent fraud.
“We continuously pilot new initiatives to stay ahead of the curve, and the virtual IBAN screening tool is a prime example of how we innovate to mitigate risks in real time.”
Virtual IBANs will remain a critical part of the payments landscape – and when combined with forward-looking tools and cross-industry collaboration, they offer both security and flexibility in an increasingly complex environment.