The Payments Association has issued a warning highlighting that international criminals are taking advantage of advancements in cross-border payments to conceal funds and avoid detection while engaging in Authorised Push Payment (APP) fraud.
The UK advocacy group believes that organised criminal gangs exploit the complexities and speed of cross-border transactions to obscure their activities, particularly through accounts based in the UK. APP fraud losses in the UK reached £213.7 million in the first half of this year. The widespread nature of this scam is underscored by research from Visa, indicating that one-in-three consumers in the UK fell victim to some form of APP fraud in 2023.
Tony Craddock, director general of The Payments Association, commented: “The UK’s Faster Payments system was the first of its kind, but it was not designed to safeguard against today’s sophisticated fraudsters. Consequently, while it facilitates rapid fund transfers, it has become a target for international criminals, as the speed of transactions complicates efforts to stop fraudulent payments before the funds vanish into networks of ‘money mules’ worldwide.”
Craddock also noted that the rapid and convenient nature of global payment channels allows criminals to exploit gaps in systems across different jurisdictions, complicating fraud detection. He emphasized that the absence of unified international standards for Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols lets fraudsters take advantage of regional regulatory variations to conceal their activities.
In response to this issue, The Payments Association is advocating for increased cooperation among financial institutions, regulators, law enforcement, and technology providers to share data, intelligence, and best practices. Craddock points to Australia’s collaborative approach as a successful model, where partnerships among banks, law enforcement, and tech providers have significantly improved fraud detection.
Despite the challenges, the report highlights potential areas for improvement, including strengthening KYC standards, encouraging cross-border collaboration, and implementing tokenisation to reduce exposure to fraud risks during transactions.