Editor's note:Baptiste Collot is the founder and CEO of Trustpair, an automated fraud prevention service provider. The company is headquartered in Paris, France, with its U.S. headquarters in New York. This article reflects the author's personal views.

With the advent of artificial intelligence, a new era of sophisticated fraud has begun, catching many corporate finance departments off guard.

In a recent case, a finance employee at a multinational company was reportedlydefrauded of $25 million using deepfake technology—scammers impersonated the company's Chief Financial Officer (CFO) during a video conference.

In a recent survey, Trustpair found that in 2023,96% of U.S. companiesexperienced at least one fraud attempt, anincrease of 71%compared to the previous year. CFOs face an increasingly severe fraud environment. The surge in cyber fraud, complex and ever-changing, urgently requires companies to reassess their defense systems.

Today, fraudsters use AI-based technologies—including ChatGPT and others—to craft elaborate scams. From fake websites and deepfake phone calls to AI-generated text messages and phishing emails, these sophisticated methods make traditional manual fraud detection methods seem inadequate.

The Dual Threat to Finance and Reputation

Fraud costs are rising rapidly, and CFOs face extremely high risks. Over the past 12 months,36% of U.S. companieslost an average of more than $1 million due to fraud,25%of companies lost more than $5 million.

Beyond the direct financial impact, other consequences of fraud cannot be ignored. These potential impacts include: damaged investor relations, falling stock prices, legal proceedings, and the breakdown of key partnerships. In fact,66% of companiessaid they would stop working with an organization if it lost money due to payment fraud. This again highlights that fraud prevention and cybersecurity measures are "table stakes" for CFOs.

Although67% of companiesexpect fraud activity to increase in 2024, only28%of companies have comprehensive fraud prevention software in place. Reliance on traditional methods such as dual verification or manual verification remains widespread.

Furthermore, only5%of senior finance leaders say they cannot keep up with increasingly sophisticated fraudster tactics, and only14%consider the rapid increase in cyberattacks as the top challenge in fraud prevention. This "fraud won't happen to me" mindset is extremely dangerous, especially given the high success rate of fraudsters deceiving U.S. organizations—in 2023, of U.S. companies that experienced fraud attempts,90%were successfully attacked.

Automation: A Powerful Tool Against Cyber Fraud

The key to combating cyber fraud lies in automation and artificial intelligence.

Manual processes, such as manual callbacks (still used by35%of companies), need to be replaced by automation to counter the cunning of modern fraudsters. Hackers not only infiltrate your systems but also infiltrate your suppliers' systems and use their real addresses to send emails or calls impersonating them. With AI, fraudsters are so skilled that it's nearly impossible to tell whether your team is truly communicating with suppliers before making payments.

With cyberattacks becoming almost routine, CFOs need to invest in cybersecurity processes, but they cannot neglect fraud prevention. While survey respondents said they have invested in cybersecurity defenses such as training, payment security, and anti-cyberattack technology, only23%have implemented automation to confirm bank accounts before payments. The convergence of cyber and fraud requires investment in both areas simultaneously.

An example of cyber fraud is: scammers infiltrate a company's internal systems, attempting to trick finance team members into diverting legitimate supplier payments to fraudulent bank accounts. Through automation, CFOs and their teams receive real-time alerts indicating mismatches between bank accounts and payees, ensuring finance teams do not send funds to the wrong accounts.

Looking Ahead

From 2022 to 2023, fraud attempts increased by 71%, and now is the time for CFOs to rise to the challenge. As the fraud landscape evolves rapidly, CFOs must embrace new mindsets and technologies to stay ahead. The future of financial security and business relationships depends on the choices CFOs make today.