European finance is moving faster than ever. Instant payments and open banking have revolutionized convenience for consumers, but this velocity has a dark underside. We are currently locked in an escalating arms race against increasingly sophisticated criminal networks.
Gone are the days of simple bank heists. Today's financial crime is digital, automated, and highly organized. Criminal syndicates utilize AI to craft perfect phishing emails, deploy botnets for credential stuffing, and recruit vast networks of "money mules" across EU borders to launder proceeds in seconds.
For years, European financial institutions have fought this battle with one hand tied behind their backs. The fundamental problem is visibility. Criminals operate as fluid networks, hopping between institutions and across borders. Banks, however, operate in silos.
A fraudster might steal funds from a customer at Bank A, move it swiftly through Bank B, and cash out via Bank C in a different country. In this scenario, each bank only sees a harmless fragment of a larger crime. They haven't been able to connect the dots because robust privacy regulations like GDPR -essential for protecting civil liberties- have historically made sharing risk intelligence incredibly difficult.
The criminals know this. They exploit these intelligence gaps mercilessly. They collaborate; banks haven’t been able to.
This is where the tide is turning. Realization has dawned that individual defenses are insufficient against collective threats. The future of fraud detection lies in Information Sharing Partnerships supported by advanced law enforcement strategies.
But how do competing banks share sensitive client data without violating privacy laws or commercial trust?
Enter Privacy-Enhancing Technologies (PETs), with Multi-Party Computation (MPC) leading the charge and reshaping the battlefield. MPC delivers the power to combine data, without sharing it.
Multiple banks agree joint analysis of encrypted data e.g. lists of suspicious IBANs, alerted clients, device IDs, or unusual transaction patterns. Algorithms analyze the combined dataset to find overlaps, identify high-risk networks or identify fraudulent IBAN’s. No single bank could ever make these identifications alone. The result is a uniquely high degree of certainty in decision making. It helps protect the bank, and its customers alike.
The revolutionary aspect of MPC is that no raw data is ever decrypted or shared. Bank A never sees Bank B’s customer names. The data remains mathematically opaque to everyone involved. The only output from the MPC process is the insight: a flag indicating, for example, that a specific account is receiving fraudulent funds from five different institutions simultaneously.
By utilizing MPC, European banks are moving from reactive defense to proactive intelligence. Instead of chasing individual fraudulent transactions, they can map entire money-laundering networks spanning the Eurozone. They can confidently identify fraudulent IBAN’s before a transaction ever takes place.
The arms race will continue as criminals adapt to new controls. However, technology like MPC finally allows financial institutions to leverage their collective strength. In the modern fight against financial crime, collaboration -secured by advanced mathematics- is our strongest weapon.
Generate new insights on sensitive data with Roseman Labs’ secure Multi-Party Computation technology. Want to find out how your organization can do that? Contact us using the form below.