What a Financial Crime Expert Knows That Most People Don't

Cold open (trailer montage)

The episode opens with a montage of clips lifted from later in the conversation, plus the guest's self-introduction. These lines recur verbatim in the interview below– that is not a duplication error.

00:00:00 Aleksandra King: Fraud now costs more than the global drug trade.

00:00:04 Jessica Cath: It does indeed.

00:00:05 Aleksandra King: You hunt the bad guys.

00:00:06 Jessica Cath: The UK is a big hotspot.

00:00:09 Aleksandra King: This is a big problem, clearly.

00:00:12 Jessica Cath: You've got half a million that is gone very, very quickly.

00:00:15 Aleksandra King: Okay. Is it coming back?

00:00:17 Jessica Cath: So that's the interesting question. I am Jessica Cath and I head up the financial crime team at Thistle Initiatives, and we help banks, fintechs, crypto firms to prevent financial crime. Young people don't often realise that you're doing something illegal.

00:00:31 Aleksandra King: That's really scary. How should we visualise what's going on?

00:00:37 Jessica Cath: Visualising a scammer is very difficult because they could be anyone. Phone calls you will not get anymore.

00:00:41 Aleksandra King: What are push payments?

00:00:43 Jessica Cath: This is very difficult for banks to spot.

00:00:46 Aleksandra King: What's the most convincing deepfake at the moment?

00:00:48 Jessica Cath: The most convincing deepfakes are– 40% of our crime is fraud. 40%! The frameworks the government have set don't quite work.

00:00:58 Aleksandra King: That's not good enough.

00:01:00 Jessica Cath: We need more investment into policing.

00:01:05 Aleksandra King: They've not put the mechanisms in place to protect people. Why haven't they?

00:01:09 Jessica Cath: They haven't put it in place because they don't need to.

00:01:11 Aleksandra King: Top three red flags for scamming– what would they be?

00:01:15 Jessica Cath: The top three–

Interview

00:01:18 Aleksandra King: Jessica, welcome to the podcast. So basically, you hunt the bad guys.

00:01:25 Jessica Cath: I try my best.

00:01:26 Aleksandra King: You hunt all of those guys that are phoning us, trying to steal money off of our elderly parents, off of our teenagers and off of us. Is that– that's really what you do? You're going after them?

00:01:37 Jessica Cath: It is indeed. We work with lots of the financial services firms to build the structures that really get to the heart of trying to stop money laundering, fraud– all of the different types of financial crime that we actually face on the ground.

00:01:51 Aleksandra King: Okay. This is a big problem, clearly. We're all– all of us have experienced at some point someone trying to steal money off us, or people that we love and know. In terms of countries that are most affected, which would those be?

00:02:10 Jessica Cath: The UK is a big hotspot. So if we're talking about fraud, we really are a kind of scam target for the world. I mean, even one member of my own team got scammed the other day, so even when you're in the anti-financial crime space it can be really easy to fall foul to scams. We have in the UK some real challenges, for multiple different reasons. We have really good fast payments through some of our fintech players, which are great, and we love tapping for instant payments, but it does mean that we are quite exposed to fraud. And of course a lot of that money then goes overseas, but in terms of the UK, we then house a lot of the victims when it comes to fraud.

00:02:57 Aleksandra King: Okay, so this is horrible. I don't like this, because I live in the UK. Okay, so the UK is a hotspot. What about America?

00:03:05 Jessica Cath: America is not so bad, because they've got different types of payment flows. So coming back to this point around the UK really being a hub for faster payments– of course Europe has faster payment flows as well, but we really do have some exciting developments in terms of payments players which enable payments to move very fast. We also have a really good kind of crypto network as well, which again is a bit of a hub when it comes to moving fraudulent funds. Crypto of course in the US is becoming more prevalent, but until this point the regulatory frameworks have been tricky in the US. So the UK really is a bit of a hotspot when it comes to fraud.

00:03:49 Aleksandra King: Okay. That's– it's disappointing to hear that. I'm disappointed. But in terms of the cost– so I don't know if this is correct, so correct me if I'm wrong– that fraud now costs more than the global drug trade. Literally more than the global drug trade?

00:04:09 Jessica Cath: It does indeed. Yeah, it does. And when we think–

00:04:11 Aleksandra King: I can't believe that.

00:04:12 Jessica Cath: It's almost impossible to think about it, because when we think about crime, we think about drugs, and that's– when we think about money laundering, we think about organised crime. But actually fraud is something that impacts people on the ground in the day-to-day. Another statistic that's really interesting is that over 40% of all the crime in the UK, no matter what crime, is fraud– is actual fraud. And do we think that the police are spending 40% of their money trying to prevent fraud? No, they're still focused on other things– you know, knife crime etc., which of course is horrible. But fraud is really, really impacting a lot of people on the ground. Like you said, most people know someone that has been impacted by fraud.

00:04:56 Aleksandra King: 100%. So what's the most audacious scam you've seen thus far?

00:05:02 Jessica Cath: So we've seen a couple of interesting ones. One that was a recent scam that actually happened to a client of ours was an absolute classic, and this was a corporate entity receiving a phishing email that says, I am your law firm– and they were actually buying new office premises– can you send me the deposit for your new premises? And I think it was around half a million or something like that. And the executive assistant thought, absolutely, this looks like an email coming from my boss, I'm going to make that payment as quick as possible so that we don't lose out on the purchase. And there we go– you've got half a million that is gone very, very quickly.

00:05:44 Aleksandra King: Okay. Is it coming back?

00:05:46 Jessica Cath: So that's the interesting question. Once the money has gone, it can be very, very difficult to get that money back. We have been helping them, because we do have obviously lots of connections and ways in which we can try and get money back, and work with banks and different teams in order to try and expedite the process of getting that money back. But if it has already gone overseas, or it's gone into crypto accounts, it's highly unlikely that you're going to get that money back– and especially that amount is very, very difficult to get back. When we're talking about normal customers– so individual scams that are lower amounts than, say, the half a million– you are likely to get that back, depending on the scam, based on the reimbursement models. But for this customer it's a lot of money that is pretty much gone, although we have managed to get some of it back– I think about half.

00:06:43 Aleksandra King: But I mean, that can floor a business. It can definitely destroy your– you know, a person, an individual, it can. That's all your life savings, you know– gone. I mean, prevention is for sure better than cure.

00:06:56 Jessica Cath: And that's a classic scam for people– so people in vulnerable life situations. So if you are making a house purchase, that is all your savings, usually, that you're putting into that transaction. You are making a house purchase, you are in a vulnerable position for attack from these very intelligent fraudsters.

00:07:15 Aleksandra King: Absolutely– you're in a vulnerable financial state, and that's how we have to see it now. Can you just explain what a phishing– phishing email, that's how you say it, is it– is, for anyone that doesn't actually understand? We have a lot of elderly people watching too that just wouldn't know what that means. How do you identify one?

00:07:34 Jessica Cath: Yes, it's phishing with a ph instead of an f. So a phishing email is basically a social engineering craft, where somebody has crafted that email to look like it's coming from a legitimate source. So in this case it was crafted to look like it was coming from the law firm to the CEO, and then to the CEO to the executive assistant– so it looked like a full trail of emails, that it looked legitimate. It had the law firm's signature at the bottom of the email, it had the CEO's signature. And all of these different phishing emails or messages can be crafted quite closely and can be very difficult to spot, particularly when they're using things like AI to help craft and shape the messages in these emails.

00:08:23 Aleksandra King: Wow, they're using AI. Okay, so they're getting away with it, clearly– at least, even though you got half the money back, the other half they've got away with. Why are they getting away with it?

00:08:33 Jessica Cath: There are multiple reasons why they're getting away with it. One, there isn't enough resources in policing, so trying to actually get the money back through policing is very, very difficult. Two, it's very difficult for all banks, financial institutions, to try and track that money, because in the world of financial crime prevention that I'm in, transaction monitoring has become a huge, complex thing. So if you are scammed, the bank, or whoever you bank with, will be monitoring all of your payment flows, and they're doing incredible things to look at changes in behaviours, using AI machine learning models to try and assess whether or not this is a bit of a different payment. But that's all very, very hard to spot, depending on the scam– so actually identifying that it's a scam can be very, very hard. So there are just multiple different reasons that this is a very difficult thing to prevent.

00:09:29 Aleksandra King: Gosh, it's frightening. So who's profiting? Who are these people?

00:09:34 Jessica Cath: There are multiple different types of scammer. So you might think that it's someone like you or I sat on the end of a phone doing some scams as a bit of a side hustle, and there are some low-level scammers– it's becoming easier through AI to do some low-level scams– but a lot of it is actually connected to large global organised crime, and that makes it really difficult to try and stop. So when we start to peel back the layers of some of these scams– if you take a romance scam, for example, which there was a report that came out only yesterday, and romance scams are on the increase at a large scale in the UK– a lot of these are produced by scam factories in Southeast Asia, so on the border of Myanmar, often. And these are huge scam factories with, often, people– people who have been trafficked into these scam factories, often with violence. And they have really clear romance scam scripts and criteria that they must follow, and their job is to have 20, 30 mobile phones and conduct romance scams. So when we try and stop that, that's very hard, because it's across global borders.

00:10:51 Aleksandra King: But just on the romance scams– I mean, I've seen some things in the papers where you see this photo of Brad Pitt, you know, ill in hospital, and then these women, you know, they fall for these pictures. This is– but actually it looks quite fake, you think– but why did you fall for it? Is that what we're talking about, or is it more elaborate than that? Is that just maybe a low-level one that wasn't that good?

00:11:14 Jessica Cath: I think that's the wrong way to look at it. We always victimise the victim even more by saying, why did you fall for it? And that's what we shouldn't be doing, because actually it's so easy to fall for these. Because often, a romance scam, the scammers put the time in, and they've actually built up a relationship with that person over– sometimes I've seen 6 months– where they really have built up long-term relationships. And if it's part of organised crime, they can do that, because they know if you've got a longer-term relationship, when they ask for a big amount of money, you're very likely to send that across. So even if you haven't met them in person, but you've built a long-term relationship with them over time, you feel like you know that person.

00:12:02 Aleksandra King: Yeah, it's another level.

00:12:04 Jessica Cath: It's a complete other level, and we shouldn't be victimising the victims even more.

00:12:08 Aleksandra King: Yeah. So the amount of time that goes into that, and them building that credibility– that's not necessarily what would be reported. But yes, you're emotionally involved then, and you think, but that– you can't possibly be doing anything bad here, because we've been speaking for so long. You can understand, yes, when you look at it like that. But still, sometimes you look at that photo and you think, well, that wasn't done as professionally, if you are going to be a scammer– sometimes you look at the photos, to be fair, and you think, that is so obviously not done very well. But I suppose what I'm trying to get from you is, do you have levels? So maybe the ones that don't do things well, but then something that's, like you're saying, that phishing email, where it's super professional and slick and you could hardly tell the difference?

00:12:52 Jessica Cath: Yeah, there are complete different levels. So the simple ones, for me– you quite often get the phishing messages now that are just so obviously the scams from 5 years ago.

00:13:02 Aleksandra King: Yeah.

00:13:03 Jessica Cath: And there's been a lot of awareness campaigns to show that people should just be aware of text messages that look like a scam. But some scams are very, very hard to spot. So for example, a scammer might have built a completely identical webpage to your bank, that looks the same, feels the same, and the only thing that might be different is one character in the URL. So if you're not looking very closely at the URLs or the website domains, it's very hard to spot unless you know what you're looking for. And in those cases, obviously banks are actually at the moment out crawling to see who's creating fake websites of their firms, and trying to make sure that customers are aware. But if you are an individual that doesn't know anything about financial crime prevention, you might think you're just logging into your bank.

00:13:54 Aleksandra King: That's why elderly and teenagers– although the teenagers, they are growing up to be a bit more savvy, because they know how much of this is going on. They won't click on things they don't know. And even my teenager– well, she'll check, you know– she'll take the URL and she'll plug it into ChatGPT and go, valid or not, question mark, check.

00:14:13 Jessica Cath: Great. That's an excellent, excellent check. But yes, they are more savvy, but they are as well more at risk of things like money muling.

00:14:23 Aleksandra King: What's that?

00:14:25 Jessica Cath: So young people are often at risk of becoming a money mule. A money mule is–

00:14:31 Aleksandra King: Oh, like a donkey or a mule that's carrying something?

00:14:36 Jessica Cath: And it's basically carrying money from one place to another. So this is where you might have a scammer, or another type of financial crime that's where the money's come in from, and they are asking to use your account to move that to somewhere else. So you might just be part of the transition, and carrying that money and moving it from one place to another. And often they target young people, because young people are looking for quick ways to make a little bit of extra cash on the side, and it's a really easy thing to do– you say, absolutely, these are my account details, send me the money– you often keep a small portion of the fee, and then you just send the money elsewhere. And young people don't often realise that you're doing something illegal, which can ruin your credit rating– if the bank spots it, your accounts will be shut down. I know some young people that have been unable to get mortgages in future because of activities that they've done through money muling when they're younger. They might not think that they're doing something criminal, but being part of that money laundering flow, you are.

00:15:46 Aleksandra King: Gosh. This is literally– I'm so glad we're talking right now. Because I hear– you know, you hear about drug mules, and you think, okay, well– that's a terrible thing, you meet the wrong people, you're transporting these drugs across, and that's it, your life's ruined, basically. But this is a money mule thing– more subtle, very dangerous for these teenagers, and they need to know about it. We need to get this out there– this has got to be a [unclear: Short?]. It's got to come with a warning and say, all teenagers, listen to this. That's really scary. So how will they know that they've been money muled? What are the signs for this, for the teens?

00:16:20 Jessica Cath: So, anyone that's asking you to– you know, can I send you some money, if you move it somewhere else. The challenge is often it comes through people that you semi know. So it might be through a school friend, or it might be from a university friend, or a friend of a friend, and you feel like there's an element of trust there. But that's why they're so at risk. Ultimately, if anyone's asking you, can I just move some money through your account– that is a red flag.

00:16:50 Aleksandra King: Okay, that's pretty clear, right? So you said earlier about, when we think about the scammers and fraudsters, it's not necessarily this one lonesome person, you know, sitting on the other end of the phone trying to do this little small scam. So how should we think about them? How should we visualise what's going on?

00:17:09 Jessica Cath: So visualising a scammer is very difficult, because they could be anyone– that's the challenge. And like I said with the money mule piece, it could be someone within your network, and that's where really good quality scams take place, where there is an element of trust. Or it could be a huge global organised crime gang, potentially with links to nation states– you know, there's a lot of big, big criminal groups behind this. Or it could be someone very small, nearby.

00:17:43 Aleksandra King: Okay, so it could be solely the– and a trusted one, but it could be a massive company– corporate organisation, just a crime organisation with levels, and I'm assuming management and people that have to report to somebody.

00:17:58 Jessica Cath: Exactly, exactly. I mean, we have actually seen South Korea advising their students not to take jobs in Southeast Asia, because they've fallen into these scam factories and they're lost– they can't get them back.

00:18:13 Aleksandra King: So this is complete human trafficking. My goodness. Okay, so could you walk me through a typical modern scam and how that works? Just, you know, from the lowest level up, so that we can understand a bit better– insight into this world.

00:18:28 Jessica Cath: Yeah. So perhaps if I go back and just take the romance scam, because this is one that perhaps people can relate to. That starts with some form of contact point with an individual, and the relationship is built up over time– usually on the phone, or can be through chat messages, or perhaps it started on a dating site and then they've taken it off onto WhatsApp, or something like that. And it really does take a long time. So they build up a relationship– fake personas, fake people, fake backgrounds, fake scripts. So for example, one of the scripts might be, after 2 weeks you must tell them that you love them, after 4 weeks you must move on to the next stage, or whatever that might be. So it's really, really scripted, to get the– to make the most of emotional manipulation.

00:19:31 Aleksandra King: Awful. Absolutely disgusting, really.

00:19:34 Jessica Cath: And then once they're ready to do the scam, it's then about putting pressure. So some form of fast request in a vulnerable situation that relies on pressure. So if you have anything that is a pressure to move money at speed, that is a red flag. So often it will be, I don't know, my mother is in hospital, I need money to pay for her health care, please can you help me out, I need 10,000– or they might need just 1,000 to start, and then it increases upwards quite quickly. And all of the scams are around some form of pressure to move money quickly.

00:20:12 Aleksandra King: It makes me think of my parents, you know– when they sometimes come to me, and my dad will say, oh, I've got an email and there's a potential thing to invest in, and this and that. And whenever I hear anyone– just anyone– asking for money, ever, I'm like, no, no, no, no.

00:20:26 Jessica Cath: It's the way to go.

00:20:27 Aleksandra King: But it's a sad situation, where you have to go out not trusting anyone.

00:20:32 Jessica Cath: That's right– and questioning before you make any payment.

00:20:35 Aleksandra King: Yeah. And same with phone calls– they've had phone calls saying, you know, you need to do this, and then you– pressure about money– and you know, you just think, well, anyone– no one would phone you like that about money, so you can't– don't take the call, put that down.

00:20:48 Jessica Cath: Yes, don't take phone calls. So phone calls you will not get anymore– phone calls will not take place. But if someone does phone you, it's absolutely 100% a scam. So phone calls, no. And if you are receiving a message or an email and you're not sure about it, phone your bank on the number that you know is the bank, and ask them and say, I've just received this message, can you confirm? They will confirm, and then you can do it that way.

00:21:20 Aleksandra King: You know, there's even weird things going on about podcasts, that you'll get an– and I got one from, supposedly– and I could tell it was a scam– but from Kristin Cavallari, who was on The Hills in America, saying, oh yeah, you know, come on my podcast, and we'll pay you to come on the podcast, and this and this and that. And it just didn't feel right, and it wasn't. No. So I contacted them and I said, just so you're aware, you know, you've got these people. And they're like, oh yeah, we're aware, but thank you for bringing this to our attention. If it doesn't feel right– why would that– why is that a thing? What are they trying to do?

00:21:58 Jessica Cath: Well, it'll usually be the next stage. So that might be the first trigger point, to start building whatever relationship, or start the process of the scam, and then they'll lead on to something else. Actually, one other scam type that's really important, particularly for young people, to be aware of, are any sorts of scams through phone theft. So recently went to an event where someone talked us through the process– he'd actually had his phone stolen, and within 15 minutes he'd lost 40,000.

00:22:30 Aleksandra King: Ooh. Okay.

00:22:32 Jessica Cath: And that's purely because he had his phone stolen whilst he was walking along, and it was open and unlocked.

00:22:38 Aleksandra King: Yeah.

00:22:39 Jessica Cath: And it was a– that was a small on-street gang, purely on for phone thefts. If it's open, they have access to– usually we have all of our banking apps on our phone, and he instantly swept through all the accounts and drained them.

00:22:54 Aleksandra King: Drained them.

00:22:56 Jessica Cath: Yep.

00:22:57 Aleksandra King: And you see that a lot in the streets of London today. And I was in London for the weekend, and my daughter got her phone out, and I said, put that away right now, we're walking around– because– and my husband saw someone's phone being snatched right in front of him, and the guy tried to run and catch them, but it didn't work. It's just happening all the time.

00:23:14 Jessica Cath: All the time. A couple of things that, on the phone theft, you could do proactively. One, just keep it locked in your bag. Two, when you're tapping on the tube– actually, some people are going back to tapping just with their card, because if you have your card stolen, it's much easier to cancel your card than it is to cancel your phone, which has everything.

00:23:38 Aleksandra King: True. So should we be using the phone out when we're tapping on the tube?

00:23:42 Jessica Cath: There are also ways to hide the apps in your phone. So for example, if you have your HSBC banking app, for example, you can change the icon, and you can change the name HSBC to something completely random that you know is your banking app, but someone who might have stolen your phone wouldn't be able to see that icon. So there are some ways and techniques that people are trying to deploy to stop this. But ultimately, it's a pretty sad situation to be in, where we're worried about, you know, 40,000 instantly leaving our accounts if you have your phone stolen.

00:24:19 Aleksandra King: Gosh. Okay, a term I've heard– push payments. What are push payments?

00:24:26 Jessica Cath: So authorised push payments, or APP fraud, is a particular type of fraud. This is very difficult for banks to spot, because this is where you or I actually authorise that payment ourselves. So for example, in Covid, we're all sat at home thinking, I really want a new puppy– APP fraud puppy scams were really popular. So this would be where you see an advert for a new puppy, and you think, this is brilliant, and you authorise a payment for the puppy, or the deposit, and you never get that money back, and you never get the puppy. And it's really common in terms of purchase scams, that kind of thing. So if you see something online, you authorise a payment, and then actually the thing never turns up. It's really hard for banks to spot, because you are authorising that payment yourself, and banks must allow you to make payments– you must be able to make your own payments. You are the master of your own destiny when it comes to moving your own money around.

00:25:32 Aleksandra King: But what if it's a scam? So where are you buying it from? There's not going to be Amazon– what is this, like Gumtree, what– I mean, what actually?

00:25:42 Jessica Cath: On different marketplaces there are quite a few fake storefronts. I actually came across one the other day– I think it was on Etsy– that to me looked very clearly an AI shopfront. But I know that marketplaces are actually doing an incredible amount to scan their websites constantly for fake storefronts that come up on their platforms. But it's a very, very difficult piece.

00:26:13 Aleksandra King: So we really– so we now need to be careful going on to these marketplaces. So Etsy– surely not Amazon, they'd be a bit more–

00:26:19 Jessica Cath: Amazon– I need to be careful what I say– but of course Amazon as well has its problems.

00:26:25 Aleksandra King: Right, okay.

00:26:26 Jessica Cath: But actually it's more around Chinese companies not paying any tax.

00:26:30 Aleksandra King: Okay, so it's more of a tax evasion problem.

00:26:33 Jessica Cath: Tax evasion.

00:26:34 Aleksandra King: But they would be more– Amazon probably be more savvy in spotting the technical–

00:26:38 Jessica Cath: Well, Etsy's very, very, very good as well, and they take them down very, very quickly. Facebook Marketplace has had to massively step up in terms of monitoring bad stuff on there. Yeah– they are still not perfect. So even if you're buying off a marketplace, you just need to be conscious and do your own due diligence checks on the vendor. So look– have they got any reviews? Do the reviews look fake? How many other products are they selling? How long have they been on the platform for? So all of those kind of things– you will need to do your own checks as well.

00:27:10 Aleksandra King: Just value to going into a shop, and just buying it from a shop and from a person you know and trust, and buying the quality, and all of that. I just– I mean, I'm going back to that. Yeah, totally becoming more old-fashioned, you know– that it all goes back– it all comes back.

00:27:27 Jessica Cath: It will, it will.

00:27:29 Aleksandra King: Okay. Okay, so we spoke about online fraud, and the link to organised crime and human trafficking. It's not always human trafficking, is it? But it can be.

00:27:44 Jessica Cath: It can be, it can be. And once the money is gone, it's normally very difficult to recover it.

00:27:51 Aleksandra King: So we've spoken about that. And emotional triggers– there is an element of using emotion to con you. So that is a real recognisable thing.

00:28:01 Jessica Cath: So if someone's– that's also a red flag– if someone's putting pressure on you, too good to be true, anything like that, and you're finding your emotional strings being pulled– that's a red flag within itself.

00:28:19 Aleksandra King: Can we talk a bit about AI voices, AI videos, all that? We've seen that happening now– how much more advanced AI is. Like, can we trust a phone call now from someone who we think is our loved one, someone we know and trust? And can we trust a video with this person's image, or not?

00:28:38 Jessica Cath: So AI voice is interesting, because to create a set of words, or a small conversation, AI only needs a tiny, tiny segment of your voice. So if you have a podcast, for example, and you're a podcast host, there is plenty of your voice out there–

00:28:59 Aleksandra King: Don't give them ideas!

00:29:01 Jessica Cath: –to train AI models.

00:29:03 Aleksandra King: And also, if they try to come after me, I've got you.

00:29:05 Jessica Cath: Exactly– there we go, there we go, get them back. So yeah, if you've got videos online, or you do any public speaking, there'll be plenty of clips for AI voice to be trained. So you do just need to be conscious of AI voice. In terms of videos– again, they're very easy to create now. Still a bit harder than simple images, but they're very easy to create, and images are very easy to create. So if we're thinking about things like account takeover fraud, where someone takes over your account– perhaps they use one of your images to open up your account–

00:29:47 Aleksandra King: Face recognition.

00:29:48 Jessica Cath: Face recognition.

00:29:49 Aleksandra King: Switch your face recognition off immediately, everyone who's listening. And don't trust any videos and voices unless you check it with a person.

00:29:58 Jessica Cath: Yeah, exactly. It's very, very difficult. But we're still– we still haven't got to where I think we're going to go in terms of criminal use of AI yet. There's still a lot more that's going to happen. So in the last 5 years, we've really seen criminals start to explore these different methods; in the last 2 years, we're really starting to see it ramp up. But this is now a ramp-up phase in terms of different types of criminal uses of AI. On the flip side, there are some really exciting things happening in terms of using AI to stop AI-generated scams. Because often, a human being trying to spot an AI-generated image or video– can be very difficult. Actually, I was in a room of financial crime professionals– or anti-financial crime professionals– and we were looking at different images and videos side by side, and we've been trained how to spot AI versus human images, and even we were struggling to spot quite a few of them. And that's where only AI is good at spotting AI-generated images and videos. So I suppose it's not all a doom and gloom story, because there is quite a lot of financial crime prevention that's using these technologies to try and prevent scams.

00:31:24 Aleksandra King: Absolutely. But we're doing a bit of a kind of catch-up, constantly, with new methods. Well, they want to use the AI in an evil way, and then you've got to counteract that, so you've got to develop to– you know, to just be the antidote, like the opposite. But it's a tool– it's a tool, be used nicely or not nicely, I guess. What's the most convincing deepfake you've ever seen?

00:31:44 Jessica Cath: So at the moment, the most convincing deepfakes have still been images. So using people's images, or fake images, to create– open new accounts. In terms of videos, they're getting there, but most of the deepfakes are still just people's images being used in different ways to circumvent controls and move illicit money around.

00:32:09 Aleksandra King: So in terms of governments learning about this– because, you know, governments in a way are administrators as well. They put things in place, but they need the knowledge, the know-how, to know what to put in place. Are they talking to people like you, to your company?

00:32:24 Jessica Cath: They are, they are indeed. So actually, before the last election, I went to– and I was part of– some Labour Party policy groups. So I know that pre this election, the Labour Party was out looking and speaking to industry about this, and I'm sure other parties are doing the same. There are different industry associations that lobby the government a lot in terms of the direction of travel for scams– the importance of, 40% of our crime is fraud. 40%! Let's put that out there. So we need to do something about this. But the challenge is that the frameworks the government have set don't quite work, and that's where the lobbying is coming into play.

00:33:09 Aleksandra King: Yeah. I mean, that's not good enough. It's just not good enough, is it?

00:33:13 Jessica Cath: It's not. So we– 40%– no, we need more investment into policing, but we also need more in terms of regulatory frameworks to allow for data sharing across banks, payments firms. Because if you are scammed at one firm, the money's going to move to another firm, and if you're looking to get that money back, the firms all need to be speaking to each other, and very, very quickly, because the money often moves all within 10–15 minutes. So we have some regulatory frameworks that facilitate the data sharing, but unfortunately we've got privacy frameworks that most people are more concerned about. And when you talk to people day-to-day, they will tell me, I'm really concerned about my data privacy. But I'll challenge them and say, but you're also concerned about getting your money back if you were defrauded– so where do you want the balance to lie? Because if you are defrauded, you're going to call the bank and say, give me my money back. But at the same time, we can't build effective controls when everything is– we're operating in silos.

00:34:24 Aleksandra King: Of course. If 40% of crime is fraud-related, the loss of money here– the sheer waste of money– is like opening a tap and letting it just drip out, and 40% of all of that just is complete and utter waste. Is it not then financially sensible to put the frameworks in place, and look at all those GDPR and, you know, move things around a little bit to protect us, so that we're not losing money?

00:34:54 Jessica Cath: Not so much for the government, because they've built the new framework with the APP fraud reimbursement. So for the voter on the ground– you or I– you will likely get your money back if it's a small-scale fraud.

00:35:09 Aleksandra King: Okay.

00:35:09 Jessica Cath: So if it's a small-scale fraud, banks, payment firms are now under reimbursement requirements where they must reimburse you. There are a couple of different points around that– there are some limits, there are some nuances, which I won't go into– but they must reimburse you. So from a government perspective, for their voters, actually, for small-scale fraud– which accounts for a lot of fraud– pretty much everyone's going to get their money back, and they're happy. But actually, that means that the financial services market is shouldering the financial burden of fraud. So they are reimbursing you, but actually, who's spending the money to then go and actually recover those funds? Some of the funds can be recovered, but where they can't be recovered, ultimately it's the financial services firms that are shouldering the burden. Which for me is a challenge, because a lot of the frauds come from social media platforms, they come from–

00:36:07 Aleksandra King: About them, yes.

00:36:08 Jessica Cath: –and they come from different players. So they're almost the source, or the facilitators, of the fraud, and they are shouldering no responsibility.

00:36:19 Aleksandra King: –ask you about them. And they should shoulder responsibility– if the fraud is occurring on their platforms, that they've not put the mechanisms in place to protect people. Why haven't they?

00:36:31 Jessica Cath: They haven't put it in place because they don't need to. They do make a lot of money, and they have incredible engineers that can build incredible monitoring models to take down scams. Now, if you take Facebook, for example, they do do this– they do claim to take scams down– but there are so many scams that are not being taken down. If you take Instagram, for example, there are lots of investment scams– investment influencers that are claiming you can go and make millions by investing in some scam products. A lot of those are still not being taken down, and once people pay into those, that money goes into the system, and it's being reimbursed by banks, where they're shouldering the responsibility. There are some different policy statements that might look at bringing social media, for example, and telecommunications platforms into some form of reimbursement scope, but the operational logistics around that would be very complicated. So I think it still needs fleshing out as to how it looks like, but for me, they absolutely need to be brought into scope– otherwise you will not stop the half of the sources of fraud scams.

00:37:46 Aleksandra King: I mean, the problem's big enough, it's deep enough, we've all been affected. And as far as I'm concerned, the government needs to be talking to you all the time– wherever you go, everywhere with them– and just sorting it out. And yes, we need accountability across all these different, almost like, entities. Wherever the fraud happens– where the fire– it starts, sparks, you know– you're accountable in that area. You know, if you're the social media platform, it's starting there, it's growing there, it's spreading– that's the source. That's what needs to change.

00:38:12 Jessica Cath: Exactly. But it's almost going in the opposite direction with some of the messages coming out of the US government, because of course they're very, very pro-business, very pro-crypto, and loosening some of the regulatory requirements around some of those big tech firms. That's kind of the primary motivator at the moment, instead of putting in the right regulatory frameworks to protect consumers. So I think we might actually be going back in a different direction, depending on the pressure that comes from the US.

00:38:46 Aleksandra King: I mean, I'm definitely pro-business, and– and, you know– but I do feel like there are ways of doing business, and you can be sensible and do it safely, and still make money. But then you're also losing money, so they shouldn't see it as– yeah. I mean–

00:39:01 Jessica Cath: The same– the same for me. I mean, I'm very, very pro supporting our financial services markets– otherwise I've got no job. I work closely with them day-to-day, and I can see that they're shouldering a lot of– a big burden, when actually that should be shared. And if you look at the day-to-day consumer, and the people on the ground, we've got too much fraud, so we must bring them to scope.

00:39:25 Aleksandra King: Yeah. It's almost like we also need to– I mean, this podcast is useful too– I know that people are watching, the elderly people will be watching, all sorts– educating people, in a way. You've got to educate the public as to what a scam looks like– what do you check for– I mean, us, on an individual level, because we're the ones falling for it. I suppose if they use our image, that's a different story, but then there are protections that we can put in place once we know that it's a danger– you know, the face recognition, switch that off, don't use it. You know, there's things that we can do to protect ourselves– take that URL, pop it into ChatGPT, or check that phone number– who called me? There are lots of things to protect ourselves.

00:40:11 Jessica Cath: I think we've covered a few of them– you know, for example, the changing of the icons on your phone. There's lots of small things, but ultimately the biggest thing is to just question everything before you make a payment. And it's a sad situation to be in, but always question. And what I have with my grandparents, my parents, my family members– if they get something that just looks off, or any requests, they will screenshot it and send it to me, and just put it through a bit of a filter, to say, what do you think? And just taking that minute to think about why you're making the payment– does this make sense? It probably doesn't. If it's come through urgently, then it probably doesn't. There was another really good example– my mum got a message saying, hi, it's your daughter Jess– because they can see, you know, from social media, who that is– I'm in a really difficult situation, lost my phone, on another person's phone, I need money now. And of course, as a mother, she thought, hang on a second, my daughter's in trouble. But she took that extra step to actually just call me, on the number that she knows is my number, to say, Jess, is this you? Are you in trouble? I said, no, I'm not in trouble. And that's exactly what she needed to do– was to take that extra minute, question it, ask people, and then don't make any payments.

00:41:41 Aleksandra King: Yeah. Gosh, I've had quite a lot of texts– that she got– going, hi Mum, can you call me back; hi Mum– this said, you know, I'm also– I'm lost, I'm in trouble, I'm this, I'm that. That's the one– [unclear: me please?]– those I've had. But it's a random number, I don't know it– why would you be–

00:41:59 Jessica Cath: Exactly– just block.

00:42:00 Aleksandra King: Exactly, yeah– block, all the time. But then you've also got just annoying, you know, business calls and things that you block. But my husband has this thing where he's just– any number that he doesn't recognise, any number, is straight voicemail. He will never answer a number he doesn't recognise, ever. Is that a good idea?

00:42:20 Jessica Cath: I do exactly the same.

00:42:21 Aleksandra King: Do you?

00:42:23 Jessica Cath: And if it's a number that I need to call, they'll leave a voicemail, and I'll call them back. They'll leave it if it's– it's absolutely– and if they don't, they'll email me. You know, if it's one of my clients calling me on my mobile and I don't have their number, they will either leave a voicemail or they'll email me, and I'll call them straight back.

00:42:40 Aleksandra King: Yes. Sensible businesses, people, will leave a voicemail. They won't just keep calling you on all these different numbers and things, or they're trying to spam you, or sell you something, or pressurise you into– it's not a good look. Yeah. No– although sometimes, you know, you've got to take that call. The other day I did take a number that I didn't know, and I was right, because it was the decorator. He was just trying to say– I mean, are you going to– you– I'm here now, you're outside your house, yeah– so something. I knew– I suppose in the back of my– I knew that I was expecting– because I'm very suspicious if I ever see a number. I don't want to be harassed, and it's a difficult situation.

00:43:15 Jessica Cath: But that's the way to deal with it– is to be constantly suspicious. But then, like I said a few moments ago, there are a lot of positives here as well– I don't want to scare people into just being constantly suspicious all the time. But there are lots of exciting things happening at banks, at fintechs, to try and help you process payments safely. So when, for example, on your banking app, when you're making a payment, you might now see a million and one questions that say, do you want to make this payment? Are you sure you want to make this payment? Can you explain why you're making this payment? And whilst that might be annoying, actually it's designed to take you through that pausing, reflecting and thinking process before you verify any sort of large movement of funds to a new third party. So that's what it's designed to do– it might be annoying, but please do take note and think about those questions when you get them, if you're just about to move your money somewhere.

00:44:19 Aleksandra King: I did notice those messages coming up, actually. So, top three red flags for scamming– what would they be?

00:44:29 Jessica Cath: So for me, the top three– I mean, the first would definitely be speed. So– and the urgency– speed or urgency, I don't know if that's one or two, but the urgency. If you have got something that is coming through with urgency– not many things are that urgent. So if it's an urgent, please move the funds– it's highly likely to be a scam. The second red flag is anything around sort of the emotional manipulation– so whether or not it's– and again, it ties back to the urgency– so some form of emotional manipulation. And then the third– if it's just something that you don't recognise. So if it's a new third party, or a different payment that you don't recognise, and it feels off– then it probably is off.

00:45:19 Aleksandra King: Then it's probably off. And we've spoken about the elderly and teenagers being, you know, the particularly at risk of this, but it sounds like– not only– we're all at risk, corporations are at risk– we're actually all– all of us– that are at risk. So if you could leave people with one– it's difficult, but one golden rule before transferring any money online– what would that be?

00:45:46 Jessica Cath: It's very difficult to try and nail it down to one. I think the one would have to be, question it– and think, and take that moment before you make the payment. I mean, it can be very difficult– for example, if you're in the middle of a 6-month romance scam– to take that minute, and to take time to think and question. But ultimately, do just think, just question– hang on, have I done the right due diligence checks for this? Do I know the person? Why am I doing this? And that's the thing to do.

00:46:23 Aleksandra King: Jessica, it's been an educational pleasure having you on. Thank you so much.

00:46:27 Jessica Cath: No problem– it's been a pleasure.