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Wealth & asset management fraud insights - 2nd edition

As fraudsters become increasingly sophisticated, firms continue to look for the best ways to defend themselves against complex schemes.

In brief
  • Firms have experienced a rise in scams, specifically financial exploitation, and seek best practices to protect their customers and mitigate liability.
  • In response to the uptick in fraud, firms are exploring new ways to bolster their control frameworks and create efficiencies within their organizations.
  • Firms continue to prioritize technology as a strategic initiative to enhance fraud prevention and detection, including the implementation of AI.

Download the full report on Fraud Insights Point of View

Ernst & Young LLP (EY US) issued the first edition of the Wealth and Asset Management Fraud Insights Point of View in 2022, providing an in-depth analysis of the fraud landscape and how wealth and asset management (WAM) institutions are addressing the unique challenges around fraud. This second edition of the WAM Fraud Insights Point of View (POV) will enrich prior findings based on fresh perspectives and comparisons, giving insights about market shifts and future fraud strategies for financial institutions. The EY US team engaged in discussions with both new and previous respondents, each with retail operations and assets under management ranging from $1 trillion to $10 trillion.

The future of fraud: EY US point of view

Based on our conversations with WAM firms and the current market trends observed, we suggest that firms take into consideration the following leading practices to proactively address fraud trends and be better prepared to succeed in the evolving fraud landscape.


Firms should seek to enhance their fraud tracking capabilities pertaining to fraud typologies, specifically scams. By clearly tracking and categorizing different fraud and scam typologies, firms can take a more data-driven approach when tailoring their control framework. As firms work to improve their tracking and reporting capabilities, they will have opportunities to better define and understand their unique fraud exposure and related losses. This will be critical as firms work to better understand the vulnerabilities that are leading to firm and customer losses.


Firms will need to apply more friction (e.g., slowing down instant payments with a high risk score) to the customer experience and emphasize education for existing customers and employees as key enhancements to their preventative control framework. Given the complex nature and sophistication of recent scams observed, customers are being coerced into authorizing fraudulent payments out of their account more often than in previous years. Education about relevant fraud typologies and the ability to slow down the movement of funds when red flags are identified are going to be essential to mitigating fraudulent activity before it takes place. Firms must work to understand how much intervention they should add to the money movement and onboarding process to fight scams and fraudulent account openings.


Firms must be diligent and consistent in their assessment of their own liability when a successful fraud event occurs. Most firms typically reimburse customers when there is a breakdown in the firm’s control framework. In addition to a sound preventative framework, firms should establish clear procedures to effectively identify customer-initiated money movement resulting from fraud and come to a consistent remediation decision. In doing so, firms will have taken into consideration the threat of litigation, regulatory action and reputational harm when making the decision to reimburse their customers.


Firms should continue to prioritize the implementation of AI and machine learning as it becomes more commonplace throughout the industry. The need for effective AI tools will be driven by increasingly sophisticated fraudsters who are leveraging the same AI technology to find new vulnerabilities and continue to find ways to breach firms’ control frameworks. Firms will need to determine how to best implement this new technology while staying current on the newest methods being leveraged against them. Capabilities that were considered cutting-edge from last year, such as voice biometrics, have already been proven to be vulnerable to more advanced techniques used by fraudsters, and firms will have to keep this threat in mind when evaluating their current risk and control framework.


As fraudsters leverage more sophisticated fraud and scam tactics, firms and customers must continue to explore more effective defense strategies. Efforts in prevention, detection and loss recovery can greatly benefit from the implementation of emerging technologies, like AI and machine learning. Firms can utilize these advanced analytics for greater efficiencies throughout their risk management framework. In addition, there has been more emphasis on whether fraud losses stem from customer actions or control failures, as it is key for assessing liability. Continuous enhancement of control frameworks, fraud programs and customer awareness is crucial in the fight against these risks.

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