“Lack of Face-to-Face Verification is a Risk for FIs”, Reported MAS & ABS

Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (BAS) have published a joint report regarding the new risks that could develop from financial institutions working remotely due to the COVID-19 pandemic. 

The paper highlights the possible risks fuelled by remote working that can lead to a breach of security, staff misconduct, and an increase in fraudulent activities. Most importantly, the paper highlights the risks of fraudulent activities that resulted from the lack of face-to-face verification of their customers. 

“In view of the protracted remote working arrangements due to COVID-19 and their likely continued adoption in the longer-term ‘new normal’, it is important that FIs consider and monitor remote working risks closely so as to take pre-emptive steps to mitigate them,” the paper says.

The paper has also pointed out the key risks of remote working in the finance sector including fraud and staff misconduct risks like customer fraud. Since a lack of face-to-face verification is being done, there are more chances that the customer can manipulate the employee and get falsely verified. There are also legal and regulatory risks due to digital signing and legal contracts. Complying with the financial regulations while onboarding the legit customers is another risk the financial institutions face due to remote working. Financial institutions have already faced cybersecurity risks and have already been affected by cyberattacks due to remote-working. 

Other risks include operational risks due to the change in the working environment. Third-party and outsourcing arrangements have been affected as well. Then there are impacts of mental and emotional stress which has affected the organizations and the dynamics of the team. 

The report by MAS and BAS also shares guidelines to help the financial institutions by continuously reviewing and improving their risk management and due diligence practices.