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UK Regulator won't name laundering banks


A regulator has said that banks that launder millions of pounds in stolen funds should not be named because customers will move to rival firms that are better at spotting fraud.

In response to a freedom of information (FOI) request, the Payment Systems Regulator (PSR) said

  • That it would not identify those banks that received the highest volume of fraudulent funds because that “would prejudice their commercial interests”.

Fraudsters have begun targeting banks that are not using

  • The confirmation of payee system,
  • Which checks that the name of the person or firm you are sending money to matches the name on the account.

The system was launched by Britain’s biggest banks in March last year, but not all banks are part of it.

The PSR wants more to sign up, while those banks that have privately blame those that have not for being the weak link in the system.

  • The value of fraudulent funds sent to banks that weren’t part of the system was £13 million between July and September last year,
  • But increased to £23 million between October and December.
  • The number of fraudulent payments went from 8,984 to 11,974.

Fraudulent funds sent to banks that do use confirmation of payee, including:

  • Barclays, HSBC, Lloyds and NatWest, fell from £38 million between July and September 2020 to £33 million between October and December.

The PSR used its statutory powers to get data on the amount of stolen funds handled by banks, but refused our request to publish that information, saying that there was

  • “A strong likelihood of an adverse commercial impact on non-confirmation of payee participating banks that is not outweighed by a sufficient public benefit.
  • The disclosure of data may incentivise consumers to move their accounts to a bank where they consider the fraud- detection capabilities are stronger as a result of having implemented confirmation of payee.”

It also said the information could cause fraudsters to target banks without confirmation of payee. It concluded that the

  • “Balance of the public interest is in favour of not disclosing”.

Chris Hemsley, the managing director of the PSR, said last month that banks that let criminals open accounts and receive money were

  • “Falling well short of where we need to be. We need to know where the funds are going.”

The PSR previously blocked a Times Money FOI request for data on banks’ reimbursement rates in cases of what is known as authorised push payment fraud. This type of bank transfer fraud cost victims £355.3 million in the first half of this year.

One bank reimbursed victims just 1 per cent of the time, despite having signed up to a voluntary code that recommends that blameless victims get their money back. The PSR said:

  • What publishing the full data could harm banks’ commercial interests and
  • “Alert potential fraudsters to vulnerabilities they can exploit”.