APP-Fraud – Let's STOP Institutions That Help Fraudsters

LONDON - Aug. 22, 2024 - PRLog -- In 2023, we talked about the Payment Systems Regulator (PSR) first report on those organisations that send and receive APP-fraud transactions. The July 2024 report on 2023 data from the PSR, shows some progress, but also shows that more must be done. What next?

The 2024 report shows a 10% fraud reduction from the 14 largest bank groups; but more notable losses increase from the top-20 receiver firms – primarily the 'non-directed firms' or smaller payments companies.

Riskskill , as members of AIRFA , often stress that the PSR and FCA must 'follow the money' – i.e. where does it go and why. The 14 typically larger APP-fraud money senders receive instructions from customers like you and me when we have been tricked by fraudsters. However, the top-20 receiver PSPs of the APP frauds show us who helps the fraudsters to launder the money: i.e., the clients of firms that receive and distribute the money that is fraudulently obtained from victims.

The latest figures for 2023 show that 67% of APP fraud losses were re-imbursed by the sending banks, reflecting a slight increase on 2022. However, from October 2024 these losses will be shared (50%/50%) with the receiving firms. The receiving firms have loudly challenged this: even though it is them that are facilitating this by processing transactions for fraudsters. They have facilitated the opening and operation of accounts for them and have failed KYC and transaction-monitoring controls.

The 'bad-boys' are made public by the PSR, some new in 2023, i.e. the PSR has named the worst receiving PSP offenders.

Both the sender and receiving banks MUST by AML law know who and where its customer is, and must understand the nature of every transaction, and must investigate all suspicious transaction activity. It is these AML/CTF controls at the receiving firm that have failed: so we wonder whether these firms that should now accept 100% of the losses? If they adhered to the AML/CTF law, APP fraud may not exist, at a minimum greatly reduced!

In addition to the industry-agreed corrective actions, a focus MUST turn to the adequacy of KYC checks at the receiving firms, and in EVERY case upon who and how fraudsters were 'let-into' the payment systems. 50% reimbursement from October this year will push these firms to address their shortcomings. If they do not, the PSR/FCA must hold them 100% liable – i.e. financially and through audits and licence restrictions.

We strongly recommend that more assertive action is taken by the industry:

Read More at Source: https://www.riskskill.com/post/app-fraud-let-s-stop-insti...