Payments risk mitigation in practice – How LYNKS enhances risk management
With growing regulatory oversight and increasing operational risks, effective risk management is essential for financial institutions. In this article, we explore how Finologee’s LYNKS platform addresses these challenges through insights from two of its three co-founders, Raoul Mulheims, CEO and Jonathan Prince, CSO. Their perspectives highlight the platform’s robust compliance and security standards, seamless transaction monitoring, counterparty risk management and secure payment pre-validation and authorisation processes, all of which are vital for enhancing risk management in payments.
LYNKS meets the highest standards of compliance and security, optimised specifically for Luxembourg-based entities. The platform adheres to ISO 27001 and SWIFT CSP, ensuring straightforward compliance with EU and Luxembourg outsourcing regulations through Finologee’s “Support PFS” license. It is also designed to be DORA-compliant, further reinforcing its commitment to operational resilience.
Fraud prevention and risk management are central to Finologee’s platforms, enabling LYNKS to implement sophisticated identification and validation workflows that align with clients’ internal policies and can adapt to evolving regulations and risk levels. Data hosting in Post Telecom Luxembourg data centres guarantees a secure and compliant infrastructure, with system redundancy and regular testing ensuring continuity and resilience in operations.
Raoul Mulheims remarks: “Our commitment to security and compliance is unwavering, as we aim to provide institutions with the peace of mind they need to focus on their core business.”
One of the core challenges in payments risk management is maintaining transparency while efficiently monitoring transactions. LYNKS addresses this challenge through its full audit trail, capturing every action taken within the system.
Raoul Mulheims explains: “This allows financial institutions to trace the journey of each transaction, ensuring compliance with regulatory requirements and enhancing internal accountability.”
In addition, the platform’s advanced counterparty validation processes ensure that all transactions are screened for risk, incorporating an IBAN blacklist/blocking feature to prevent interactions with high-risk accounts. LYNKS also allows optional integration with external tools for pattern recognition and advanced risk detection, enabling institutions to detect suspicious activity before it escalates.
Jonathan Prince adds: “This level of transparency, combined with proactive risk detection, sets LYNKS apart as an essential tool for institutions looking to improve their payment risk management strategies.”
Effective risk management relies on the ability of financial institutions to continuously assess and respond to counterparty risk. LYNKS enables users to define risk levels based on specific criteria, allowing institutions to adapt their processes according to the risk profile of each transaction.
As Raoul Mulheims explains: “This capability ensures that higher-risk transactions receive increased scrutiny through tailored authorisation rules or more complex signature processes.”
Risk levels are continuously updated through ongoing monitoring of counterparties against blacklists and sanctions lists by integrating with the leading aggregators of such lists, assuring continuous assessments that reflect the latest regulatory and operational developments.
“This feature ensures institutions always act on current information, significantly reducing exposure to unforeseen risks,” Mulheims adds.
The ability to manage these risk levels is enabled by LYNKS’ advanced Know Your Customer (KYC) control features, including optional integration with external KYC systems for customer lifecycle management.
“For institutions seeking to streamline this process, our own separate KYC Manager platform offers an advanced solution,” Jonathan Prince explains.
KYC Manager is a comprehensive digital onboarding and customer lifecycle management tool optimised for KYC and AML workflows, particularly for Luxembourg-based entities. By integrating KYC Manager with LYNKS, institutions gain a holistic view of counterparty risk, enabling more dynamic and responsive risk management. Jonathan Prince highlights that the seamless sharing of real-time data between both platforms enhances risk mitigation strategies, offering one of the most robust solutions for payments risk management.
Institutions benefit from continuous monitoring and automatic updates of risk profiles, ensuring both systems reflect changes in counterparty risk.
Raoul Mulheims adds: “When a counterparty’s risk level is updated in one system, this triggers automated actions—such as requiring additional compliance approval—ensuring proactive risk management across the organisation.”
Case Management plays a vital role in KYC Manager’s functionality, allowing institutions to track, review, update and document specific payment cases that have triggered an alert based on pattern detection or risk level rules identified during the ongoing monitoring. Built-in intelligence helps reduce false positives, ensuring that compliance teams focus on high-priority cases without being overwhelmed by unnecessary alerts.
The system’s automatic recurring re-screenings and periodic reviews further enhance risk management.
“Should a counterparty’s status change – such as being added to a sanctions list – the system automatically reopens the client dossier. Additionally, high-risk clients are reviewed more frequently, ensuring that critical risk updates are promptly addressed,” Jonathan Prince points out.
To enhance payment accuracy and reduce errors, LYNKS incorporates the SWIFT Payment pre-validation service. This feature empowers clients to verify payment data accuracy before initiating transfers, ensuring seamless credit transfers. Users can validate payee account details prior to sending payments, significantly reducing friction in cross-border transactions. This implementation not only minimises errors and exceptions but also strengthens the detection of potential fraud instances.
“By integrating SWIFT’s pre-validation solution, Finologee reaffirms its dedication to enhancing the reliability and accuracy of payment services. This upgrade empowers our clients to execute payments with confidence, supported by strengthened security measures. It represents a major advancement toward facilitating smoother and safer cross-border transactions” Jonathan Prince explains.
The payment and counterparty authorisation processes in LYNKS are built on the four-eyes principle, requiring (at least) two independent approvals for each transaction and creation or update of beneficiaries. This method significantly reduces the risk of errors and fraud, while ensuring robust oversight of all payment activities. The platform integrates with the LYNKS mobile app, notifying signatories of payment transactions directly on their mobile devices. It enables swift, secure biometric authentication and advanced electronic signatures, fully compliant with regulatory and security standards—without the need to log in via a computer. Additionally, Luxtrust and interfaces such as OAuth2 and SAMLv2 that allow for easy integrations with client’s authentication systems can also be used, offering flexibility to institutions.
Users benefit from a streamlined experience, as a single token grants access to all accounts and payment management features within the LYNKS ecosystem. The highly flexible signatory matrix adds an extra layer of security, ensuring only authorised users can approve payments. It combines rules across multiple dimensions, such as bank account permissions, currencies, transaction amounts, user group memberships, and payment types. Furthermore, LYNKS assists administrators in identifying overlaps and gaps within the payment process, empowering them to fine-tune controls and reduce exposure to potential risks.
Jonathan Prince highlights the significance of these features: “Our aim is to ensure that all stakeholders can efficiently fulfil their responsibilities, fostering a strong culture of accountability and compliance.”
