APP-Fraud – Time to STOP the Banks That Enable Criminals

LONDON - Nov. 14, 2023 - PRLog -- APP-Fraud – Time to STOP the Banks That Enable Criminals

The UK Payment Systems Regulator (PSR) has just reported on 2022 APP-fraud scams.

For five years, Riskskill as members of AIRFA  has explained the need many times to the PSR and FCA to 'follow the money'. We know who the 14 largest APP-fraud money sender institutions are (who typically send money with valid customer instructions); but at last we now know the top 20 APP-fraud receivers relative to their fraud ranking. Most importantly, these are the firms that facilitate account opening for fraudsters and for money launderers, i.e., that help them receive and distribute the money that is tricked from customers, the victims.

These payment firms 'bad-boys' have now been made public; such that the focus and ACTION can move to looking at their woeful KYC deficiencies and to make the offending parties start to pay for the support given to these vile criminals. These APP-fraud receiving organisations must be made accountable and liable: both financially and through audits and licence restrictions or ultimately licence removal. Does the PSR have a plan to make this happen though?

For five years, marketing/communications officers at payments firms have 'danced around hand-bags' and tried to do this with unfocused 'best practice' alone. Let's now start to recover this money either from the criminals or the banks that assist them.

UK Finance, as the industry association, reported in 2022 that APP-fraud accounted for 40% of total fraud reported  and growing in the first half of 2023. This impacts the UK payments integrity and reputation.

From the PSR APP-fraud performance publication, we know:

1. Banks are not currently obliged to refund customers rather it is typically facilitated through an existing voluntary code.
2. The sender bank/payment firm, currently liable under the voluntary code to reimburse the victim, still seems to be held liable for 50% under the new reimbursement programme in 2024; for the failure of the receivers.
3. Sending banks have reimbursed customers when they have done no wrong.
4. In 2024, the reimbursement plan is to share losses between the sender and receiver firm. At last, the receiving firm will feel some pain for their sub-standard KYC and transaction monitoring controls. They must take more, even all, of the liability.

To read full report visit
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