Long Finance – The Future of UK Fraud

The observation that “The International nature of fraud is not just on the rise, rather it is endemic” sums up the Future of Fraud in a compelling and disquieting manner.

There are no simple answers.

Imagine in Victim’s Narratives, from the year 2032, “her bank refuses to accept any liability”. This suggests over the next 10 years, “fraud remains the banks’ customers problem”. This attitude towards people must evolve quickly to a more understanding and caring approach as only a few percentages of the population are dodgy. Banks, however, give bank accounts to everyone passing their KYC (Know Your Customer) program but rarely discuss how the account is being used and if it is used for fraud.

The report notes some home truths:

• “The UK largely deals with fraud, accounts for 39% of all crime, through a multiplicity of forces and agencies” which requires greater collaboration

• “The CSEW (Crime Survey for England and Wales) showed 68.9% of fraud victims incurred financial loss”, an estimated 1.3 million people

• “The volume of fraudulent activity is so high, traditional manpower-based approaches to investigate and closure of the fraud are of limited use”

• “Fraud is never a victimless crime – behind the financial figures are ruined lives, mental anguish, and erosion of trust” – a double blow for victims

• “email and social networking has greatly simplified people access and complicated anti-fraud authorities” task of tracking down criminals’

• “Victims of Fraud – greater in higher-income households (earning £50,000+)” Willy Sutton’s Law “that’s where the money is” now used by fraudsters

The report does make recommendations including:

• Software can show the validity of the telephone call, website and Payee at point of contact

• Regulations to name and shame the most culpable financial institutions, by requesting a public apology and undergo anti-fraud reform training

• Using AI on fraudulent activities to flag transactions and preventing further attempts to transfer larger sums

This issue is compounded by time.

Historically, Society is used to handling fraud activities over days if not months.
Fraud today is real time.

Money moves in seconds and only a tiny amount of fraud proceeds are ever recovered.

Banks and Payment Service Providers are authorised to move money. As one banker pointed out ‘when the faster payment is gone, it’s definitely, definitely gone’.

Time lines for action to prevent fraud need to be far faster than they are to day. Fraud is happening in minutes while reporting along can take hours.

The need for regulator action requires to be months not years. For example, The Payment Services Regulator (PSR) is recommending up to 50 financial institutions (FI) be in the Confirmation of Payee programme* by June 2023. The remaining 350 FIs are to join by June 2024. That’s a further two years for fraudster’s preferred bank of choice, FI without CoP.

Should time to action fail to quicken, the question posed – tongue in cheek – by The Times, ‘Is fraud a career move’ could fall under the reports’ summary.

The report concludes

“Fraud is good’ only if it helps us to figure out what needs fixing”.

The question is – who will fix it.

* CoP has shown to prevent 80% of bank payment fraud in the Netherlands
** Netherlands is now using CoP on International payments

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