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TPA: cross-border payments could boost APP fraud

Wednesday, November 13, 2024 — 12:24:16 (EST)

London, UK – 13th November 2024 – Authorised Push Payment (APP) fraud continues to be one of the most pressing concerns for financial services, the payment industry, law enforcement and the general public – and new developments in cross-border payments may be making it easier. A new study by The Payments Association, the UK’s community and advocate for the payments industry, highlight how the speed and anonymity of cross-border payments, and the global patchwork of different regulatory regimes, is being exploited by criminals.

APP fraud is easy to understand and, unfortunately, equally easy to carry out. Essentially, APP fraud is any type of fraud that uses an Authorised Push Payment – whenever a person is tricked into voluntarily sending a payment to another person. APP fraud attempts can include anything from mass texts purporting to be from a bank or utility company asking to be transferred funds to long-term romance scams that can take months and cost the victims thousands. It is estimated that criminals stole £580 million in the first half of 2023, a staggering figure that is likely to grow more each year.

Criminals leverage the complexities and speed of cross-border payments to obscure transactions and evade detection, especially through UK-based accounts.

Tony Craddock, Director General of The Payments Association, said: “The UK’s Faster Payments system was the first of its kind, but was not designed to protect us from today’s super-smart fraudsters. As a result, although it allows rapid fund transfers, it has become a focal point for international criminals, because faster transactions make it difficult to halt fraudulent payments before funds disappear into networks of ‘money mules’ worldwide.”

Key findings from the whitepaper highlight that:

The speed and ease of global payment channels allow criminals to exploit system gaps across jurisdictions, complicating fraud detection.

The lack of cohesive international standards for Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols enables fraudsters to exploit regional regulatory differences. The industry can’t wait for regulators and common standards and must leverage AI and machine learning technologies to detect fraud.

According to Gary Palmer, CEO and Founder of Payall, “APP fraud is a growing issue in cross-border payments. If we’re to protect consumers and defeat fraudsters, as well as preserve business models, purpose-built fraud prevention software is needed to address vulnerabilities as well as improved data sharing on both sides of the transaction to aid investigations."

The Payments Association’s whitepaper also calls for increased collaboration among financial institutions, regulators, law enforcement, and technology providers, which is essential for sharing data, intelligence, and best practices. The report highlights Australia’s approach as a model, where a collaborative framework among banks, law enforcement, and technology providers has led to marked improvements in fraud detection.

Despite the challenges, the report identifies opportunities for improvement, such as enhancing KYC standards, fostering cross-border cooperation, and adopting tokenisation to limit exposure to fraud risks in transit. Implementing these strategies will strengthen protections, reduce the global cost of fraud, and protect both consumers and businesses.

APP fraud remains a high-stakes issue that requires a united, proactive response. For more information on the work and services of The Payments Association, you can visit thepaymentsassociation.org/.

ENDS

About The Payments Association 

The Payments Association (previously the Emerging Payments Association, or EPA) is a community for all companies in payments, whatever their size, capability, location or regulatory status. Its purpose is to empower the most influential community in payments, where the connections, collaboration and learning shape an industry that works for all. It works closely with industry stakeholders such as the Bank of England, the FCA, HM Treasury, the PSR, Pay.UK, UK Finance and Innovate Finance.    

Through its comprehensive programme of activities and with guidance from an independent Advisory Board of leading payments CEOs, The Payments Association facilitates the connections and builds the bridges that join the ecosystem together and make it stronger. These activities include a programme of monthly digital and face-to-face events including an annual conference, PAY360, The PAY360 Awards dinner, CEO roundtables and training activities.       The Payments Association also runs seven stakeholder working project groups covering financial inclusion, regulation, economic crime, cross-border payments, open banking, digital currencies and ESG. The volunteers in these groups represent the collective views of the industry and work together to ensure the big problems facing the industry are addressed effectively. The association also conducts original research which is made available to members and the authorities. These include monthly whitepapers, insightful interviews and tips from the industry’s most successful CEOs.   

Media contact  

Ian Donegan, SkyParlour for The Payments Association  ian@skyparlour.com   +44 (0)330 043 1315 

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Source: Company press release.