UK Banks Granted Extended Fraud Prevention Measures Amid Rising Scam Concerns

British banks have been granted a new measure to combat the surge in authorized push payment fraud, as announced by the government on Tuesday. Under the new regulation, banks will now have the authority to hold up payment transfers for an additional three days if there are suspicions of fraudulent activity involving their customers. The move comes in response to a concerning rise in scams, with victims in the UK losing a staggering £485 million to such schemes in 2022, according to the finance ministry.

The proposed legislation, set to be released in draft form, will extend the deadline for payment services providers, including banks, by 72 hours beyond the current end-of-next-business-day timeframe, should there be reasonable grounds to suspect fraud or dishonesty. This extra window aims to provide banks with a better opportunity to intercept transactions destined for fraudsters, with the new rule scheduled to come into effect by October 7th.

Emphasizing the intent to minimize disruption to legitimate payments, the ministry stated, "The legislation has been designed to minimise any impact on legitimate payments."

UK Finance, a leading industry body representing banks, has long advocated for such measures, particularly in cases deemed high-risk due to suspected fraud. Ben Donaldson, UK Finance's managing director of economic crime, expressed support for the initiative, highlighting its potential to empower payment service providers to intervene and offer crucial guidance to customers vulnerable to exploitation by criminals.

The implementation of this regulation coincides with efforts by the Payment Systems Regulator to hold banks and payment firms accountable for reimbursing customers affected by push-payment fraud. Starting from October, these entities will be required to compensate victims up to a maximum of £415,000 ($530,495), with responsibilities divided between the sending and receiving banks.

Overall, the new measure represents a significant step in bolstering the UK's defenses against financial fraud, providing banks with enhanced tools to protect their customers and mitigate the impact of fraudulent activity in the digital realm.

By fLEXI tEAM