MPs urge tougher action on economic crime

The Treasury Select Committee has called for harsher regulatory action on financial firms which are yet to introduce Anti-Money Laundering (AML) and anti-fraud measures due to be implemented by March 2020.

In a unanimously-agreed report, MPs called on regulators to take action on firms that are not ready to roll out the Confirmation of Payee system by the March deadline, and for tougher rules for firms when compensating the victims of scams such as push-payment fraud.

The Confirmation of Payee process cross references payee names with account numbers and sort codes to ensure that payments are reaching the intended recipient.

The report also cited the need for further measures to stem rising levels fraud which saw £600 million stolen from consumers in the first half of this year.

The committee said that banks should introduce a 24-hour delay on all initial payments between accounts, providing time for consumers to consider if they are being defrauded.

It also called for the Contingent Reimbursement Model, which stipulates that consumers should be reimbursed for certain types of fraud, to be made compulsory for financial institutions. Firms also should consider retrospectively reimbursing customers back to 2016, the committee said.

More specifically, regulators should define the term ‘grossly negligent’ to provide consistency on whether or not a consumer is reimbursed.

The intervention comes after it was reported that the EU is to consider the establishment of a central authority with “direct powers” to tackle money laundering after a series of high-profile scandals underlined the bloc’s weakness in preventing dirty money flowing through its banks.

Rushanara Ali, the committee’s lead member on the inquiry, said: “With scams getting ever-more sophisticated, it’s clear that economic crime is a serious and growing problem in the UK.

“To ensure that consumers are protected, it should now be compulsory for financial firms to reimburse money lost to victims of Authorised Push Payment fraud, and they should consider doing so retrospectively.

She added: “The government and regulators should take on board all of the committee’s recommendations to enhance consumer protection in the face of this harmful tide of criminal activity.”

    Share Story:

Recent Stories

New Business Frontiers
FStech’s Mark Evans discusses the future of financial services with Liu Jianning of Huawei, covering the limitations that current thinking can impose, how financial institutions can embrace technology to be both agile and resilient, and making space for the organisation to focus on the job of creating innovative business models and on delivering business value for their customers.

The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

Cracking down on fraud
In this webinar a panel of expert speakers explored the ways in which high-volume PSPs and FinTechs are preventing fraud while providing a seamless customer experience.