NOTO: The Urgent Need for Transparency Against Insider Threats

Tristan Prince from NOTO and Robert Brooker from Opus Advisors Group break down how the fight against financial crime is hitting firms hard and what they need to do to turn the tide.

NOTO highlights that while reported fraud accounts for around 1% of UK GDP, while the actual figure is probably closer to two or two and a half percent. This massive financial drain is driven by operational fraud costs that have changed significantly in recent years, which is largely due to AI-related threats and widespread data breaches. These factors have dramatically lowered the cost for criminals to commit fraud, meaning they no longer target just high net worth individuals, but anyone at any point in the customer journey.

The resulting “operational cost bloat” is visible as organizations tool up with new technologies, incur licence fees, and hire more people to handle enquiries and referrals. This threat is only going to scale, making it crucial for organizations to address the core cost drivers: people, technology, and their ability to respond effectively. While AI is great for optimizing results from staff, it cannot automate its way out of the problem entirely, especially for real-time transaction decisions needed in under 200 milliseconds. 

The most successful firms, NOTO explains, are using AI to augment their investigators, providing better data for decisions and automating only the simple, straightforward tasks, because the regulator will still need a human to be accountable for the final decision.

Brooker stresses that a key initial hurdle is cultural: organizations need to recognize fraud as fraud, instead of sweeping it under the carpet to avoid reputational damage and the loss of customer and staff confidence. Beyond the immediate money lost, the real cost of a fraud incident includes the unlooked-at expense of implementing new technology, the cost of recruiting and replacing staff, and the immense drop in productivity from the internal distraction of an event.

This need for honesty and proactive action is especially urgent regarding the insider threat and Brooker points out that this is a huge problem, particularly in fintech, where organized crime gangs are placing young “foot soldiers” in contract centers for short, 6-to-8-week stints to steal valuable customer data. Instead of quietly dismissing staff and pretending nothing happened, Brooker advises senior leadership to set a “tone from the top,” make an example of fraudsters internally, and publicize the fraud to send a clear message.

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