Financial watchdog explores synthetic data to tackle fraud

Anti-fraud teams from the Financial Conduct Authority and the City of London are working with academics from University of Edinburgh to experiment with the use of artificially created information sets

Financial regulators are exploring the use of synthetic data in tackling fraud.

Smart Data Foundry, a specialist spin-out unit owned by the University of Edinburgh, recently unveiled its Aizle platform for creating synthetic data – artificially created information intended to otherwise resemble and reflect real-world data, enabling organisation to run data-powered research without the use of sensitive information.

The Financial Conduct Authority and the City of London Corporation have worked with SDF to use Aizle to create a new data set intended to tackle authorised push payment (APP) fraud.

APP fraud scams happen when someone is tricked into sending money to fraudsters posing as other people. Last year, almost £500m was reportedly lost to APP scams, accounting for 40% of the overall financial fraud. 

The manufactured information is hoped to provide detailed insight into the end-to-end lifecycle of APP fraud, which is often committed against the financially vulnerable.

The data can be accessed via the FCA’s Permanent Digital Sandbox – a newly launched testing environment which allows firms to undertake proof-of-concept exercises with new products and services.

This partnership continues the effort from last year’s FCA and Payment Systems RegulatorTechSprint event, which focused on the issue and saw SDF’s first-ever use of the APP fraud synthetic dataset.

Bryn Coulthard, chief product and technology officer at SDF said “We focus on creating high-utility synthetic data to enable innovation within the financial services industry. We are delighted to continue partnering with the FCA with our APP fraud datasets to help play a part in tackling this growing problem and to help ignite and accelerate innovation in this space.”

The FCA regulates the operation of the nearly-50,000 companies that constitutes the UK financial services industry. While it answers to HM Treasury and parliament, it operates independently of government and its work is funded by the finance industry itself.

The City of London Police, meanwhile, serves as the lead law-enforcement agency for fraud across the UK and hosts the national Action Fraud reporting service.

Sofia Villegas and PublicTechnology staff

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