Month: April 2021

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Hollywood Actor Arrested By Feds In $227M Ponzi Scheme Including Netflix and HBO: Report by Deadline

Scammed Out

A real-life story that can be a plot of a crime thriller where Netflix and HBO helped the FBI to bring to justice a scammer who scammed investors out of hundreds of millions of dollars. 

Zachary Horwitz, who used the screen name “Zach Avery” was taken into custody by the FBI a few days ago, on charges of allegedly scamming people for more than $227 million. The people who were scammed thought they were going to cash in with licensing rights to films by WarnerMedia-owned cabler and the streamer in Latin America. 

An affidavit from FBI Special Agent John Verrastoro declared “In reality, neither HORWITZ nor 1inMM Capital ever engaged in email correspondence with Netflix or HBO, nor did HORWITZ or 1inMM Capital ever have any business relationship with Netflix or HBO at all”. 

As fake as the promises may be, Zachary Horwitz was successfully running the scam for several years, with limited questions asked by greedy investors as they were getting enough money. Although in 2019, his production company didn’t follow up on its initial notes, which stated “time-causing audits” and “corporate restructuring” at Netflix and HBO, which obviously wasn’t true. 

Both Netflix’s Director of Content Litigation “Melinda LeMoine” and WarnerMedia’s Senior Litigation Administrator “Patrick Younan” were a part of shutting down Zachary Horwitz’s fake company. Both of them denied a collaboration between 1inMM and Netflix and HBO. They also confirmed that any email regarding the topic was forged. 

To support his claims, Horwitz repeatedly sent emails in which he forwarded made up email conversations with the employees at Netflix and HBO. To find out the whole situation gets sorted out quickly, both Melinda LeMoine and Patrick Younan made important steps. Both the executives have signed a declaration to the FBI, which stated that neither they nor their organization had any relationship with Horwitz or 1inMM.

Horwitz promised financial investors a 35% return on their investments by claiming that his production company had licensing agreements with Netflix and HBO. 

As it was cleared by Netflix and WarnerMedia Executives, these relationships never existed and he scammed investors out of $227m in the last 3 years. Using this money, Horwitz allegedly built his sprawling home, which contained a cinema, a gym, and a wine cellar. According to court documents, he also used more than $137,000 on private jets and paid $700,000 to a celebrity interior designer. 
The case is currently under proceedings, and Zachary Horwitz may face up to 20 years of imprisonment if deemed guilty. 

How DIRO Can Help Organizations Reduce Fraud & Scams?

With user permission, DIRO helps companies get instant access to consumer information held by any third-party website with global coverage. Further, DIRO can authenticate documents such as bank statements, utility statements, proof of employment, proof of income, tax returns, company registrations, and proof of assets directly from its original web source.

In this specific case of the Netflix and HBO scam, investors need to know the difference between authentic and fabricated bank statements. DIRO document verification technology allows you to check and verify bank statements with automated user consent using a secure virtual browser. 

If an organization can verify documents right from the beginning of a relationship, it can reduce the risk of being scammed by at least 20%.

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Challenges In Establishing Trust In Growing Digital Banking Payment Systems Globally

trust in digital banking payment system

As time spent online is growing at an exponential rate, the demand for digital services and solutions is at an all-time high. This demand for online services includes the banking sector as well. In the last few years, digital banking or online banking systems have grown rapidly and offer better and more effective solutions than traditional financial institutions.

Switching to digital solutions instead of physical methods of banking can prove to be incredibly convenient as customers can access all banking services 24/7 right from their phones or computers. Digital banking payment systems can reach more people across the globe in comparison to physical banking. With this sudden growth of options and banking, digital banking payment systems have become globally accepted, but one major factor remains, which is “Building trust”.

In this era of technological advancement, digital banking fraud is also growing. How can banks and other financial institutions save themselves from digital banking fraud?

Digital Banking vs Online Banking

Most users think that digital banking and online banking are the same things. The debate of digital banking vs online banking has been going on for a long time. 

Digital banking is a solution where all the aspects of financial-related services are done through digital channels instead of visiting a physical bank. Online banking on the other hand offers only the core features of banking through an app or a website. 

Digital banking digitizes every activity of the bank undertaken by the customers. Digital banking represents all the activities that can be done through a physical branch, and it offers even more features. 

Challenger Banks vs Neobanks

A challenger bank has both the physical presence of a bank and it also offers complete digital banking solutions. Challenger banks offer both digital banking payment systems and traditional payment methods. Their footprint is significantly smaller in comparison to more widely known traditional banks. 

Neobanks on the other hand, offer a wide range of financial and banking services completely through digital channels. Neobanks are basically a type of FinTechs that operates under a banking license that they either acquired as an independent entity or rented from a bank.

Both Challenger banks and Neobanks focus on improving customer experience and transparency. Their main goal is to offer brilliant services to compete with traditional banks that have a bigger footprint. Knowing their customers and building trust in digital payment systems from the moment of onboarding till their entire lifecycle is a crucial strategy for these types of FinTechs. 

Both of them offer smooth and complete digital account opening facilities. They also keep adopting new technologies to prevent digital banking fraud.

Open Banking Systems

Open banking systems work in favor of customers’ demand for more choices, improved customer experience, and more control over their personal information. This is the system where customers are allowed to access and control their banking or financial accounts through third-party apps.

It prevents digital banking fraud by offering third-party financial services to open accounts, make transactions, and use any other financial data from banks and non-banks with the help of APIs. All of this control helps consumers access products and services across different institutions. These types of banks offer trust in digital banking systems as they employ the best security of technology to prevent digital banking fraud.

Use of Technology To Build Trust In Digital Banking System

A huge percentage of consumers feel that open banking will have a huge impact on how the banking industry works globally. According to several reports and surveys, it is expected that the open banking industry will have a revenue of £7.2bn.

It is expected that Neobanks and others can help in improving the banking industry to a more secure solution. One of the primary reasons these types of banks rely on technology so much is that they lack the resources to compete with traditional banks that have hundreds of thousands of physical branches. As they lack infrastructure, they rely on technology for complete automation of their banking operations, these operations can range from account opening to customer support.

All banks must keep up to date with digital fraud prevention and adopt newer technologies that can help you with digital fraud prevention. If the banks can utilize the right kind of onboarding technologies to reduce friction and improve the efficiency of the whole process with minimal error. Using this, banks can have a strong advantage over their competitors that are still going through the digital transformation process.

To build trust in the digital banking system, these are the most important questions a bank needs to ask:

  • Is this a real person?
  • Is this person who they claim to be?
  • Can I do business with this person?
  • Should I do business with this person?

Complete security and a satisfactory customer experience are vital components for success in the banking sector. Customers have to be able to trust that their personal and financial data is protected by the bank. And the banks who are looking forward to complying with industry regulations and AML practices, need to make sure that the customers are worth trusting from onboarding till the end of the relationship.

If a bank doesn’t have the proper technology, then fraudsters who know their way around technology can manipulate documents and cause millions of dollars worth of losses. FinTechs that make use of identity proofing and AML, KYC, document verification, and biometrics as part of their onboarding process will have a better chance at digital fraud prevention.

Integrated Method to Fight Digital Fraud

It is known that the best way to detect fraud, control, and fight financial crime is during the customer onboarding process. Low-friction KYC technology is important to make sure that the customers won’t abandon the process. 

Despite knowing this, many digital onboarding processes continue to be static and only used during customer acquisition which leaves a lot of room for error. They don’t make use of machine learning and advanced algorithms to identify if a user can be trusted or not and prevent fraud. 

How Does DIRO’s Technology Tackle The Problem?

Trust in the digital banking system is a tricky thing to establish, that’s where DIRO’s award-winning technology comes in. DIRO helps in making the onboarding process faster than ever by using brilliant document verification technology. 

Banks or Financial institutions can make use of the technology to verify if the customer is real or not. This minimizes the risk for fraud prevention, as DIRO document verification can help in following KYC and AML compliance with ease.

The technology offered by DIRO can be used by all kinds of banks, financial institutions, and FinTechs to verify documents in a secure environment. You can easily verify bank statements, address proof, and utility bills. To improve trust in the digital banking system, banks need to utilize this technology.

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Technologies For Fighting Financial Crime

technologies for fighting financial crime

The digitization of the world has become the stepping stone of all kinds of online fraud, no matter how big or how small. Institutions of all kinds are trying their best to develop or make use of existing technologies that can help them fight all kinds of financial crime. Financial crime identification is as crucial as employing technologies for fighting financial crime.

Technologies for fighting financial crime are being combined with human intelligence to create a powerful technology that helps in huge team compliance. To prevent financial crime, businesses and other institutions that use KYC/AML processing need to use technologies for fighting financial crime.

Rise of Financial Crime

According to a global survey, it was revealed that more than 3,000 managers who deal with compliance-related operations had come across multiple financial crimes during their operations.

Even with the rise of technology, financial crime remains prevalent. The loss from some specific financial crime can cause a lot of money. This is why technologies for financial crime prevention are crucial.

During the survey including banks, financial technology businesses, and other institutions, the thing that came to light was that financial crime had multiple disadvantages. Several organizations lost their corporate value, lost investor confidence, and some businesses lost their brand reputations and supplier relationships as well. 

All the businesses could have saved themselves from losses if they had the right financial crime identification methods in place. To prevent financial crime, institutions need to make use of the right technologies for fighting financial crime. As of right now, there is a clear and urgent requirement for organizations to employ innovative technologies to tackle the problem of financial crime with a new approach.

Technologies For Fighting Financial Crime

1. Due Diligence Checks

Huge organizations with a large number of due diligence processes spend around 4 percent of annual turnover on third-party due diligence checks. Regardless of using third-party organizations for due diligence checks, almost half of the new relationships with businesses don’t have the needed due diligence checks.

This huge gap in the compliance process like KYC/AML can allow financial crimes to go undetected until a huge loss has been incurred by businesses. The ideal way to prevent financial crime is by adding more heads to the due diligence process. Adding more budget to the due diligence process can save organizations to suffer heavy losses. 

2. Constantly Adopting New Technologies

A lot of organizations are already making their way towards newer technologies, the main purpose of the technologies is to enhance the compliance process and prevent financial crimes. 

A survey conducted by businesses showed that most businesses are embracing cloud base data and technologies for financial crime prevention. Also, around 50% of people are using API-based document verification technologies, others are using artificial intelligence and machine learning-based technologies.

In institutions where the technology isn’t applied, there can be huge losses. There are even organizations that showed no interest in employing newer technologies.

3. Faster Onboarding Process

Technologies for fighting financial crime can enhance multiple parts of the business. Making use of newer technologies can offer so many benefits. The intelligent use of technology can:

  • Speed up onboarding process
  • Reduce strain on existing resources
  • Reduce the risk of human error
  • Allow organizations to onboard more customers
  • Can decrease the onboarding times and shorter time for revenue generation. 

Almost all the top technologies for document verification or financial crime prevention are cost-effective. Apart from being cost-effective, they can enhance the overall client experience.

4. Trusted Human Experience

Businesses that use technology to prevent financial crime are more likely to find success while completing onboarding checks. After realizing this, organizations are trying to pour more funds into investing in newer technologies.

In upcoming years, the expenses on third-party due diligence checks are expected to grow by up to 50%.

5. DIRO’s Online Document Verification Technology

Using DIRO, institutions can easily verify any person or information from any bank, utility company, or government. DIRO guarantees that you can trust each PDF and use them as an original document in KYC compliance and all kinds of other processes.

DIRO is one of the best technologies for fighting financial crime. Using them, you can reduce the risks of financial crime in your business operations. Businesses who are not afraid of adopting newer technologies for financial crime prevention, can try DIRO for free or even get a demo on how it works.