The missing tools in the fight against online fraud

You recently published two pieces on online fraud (Opinion, August 20; and Inside Business, September 10). This is one of the biggest financial crime threats facing all our societies and is widely under-reported by victims.

The Association of Certified Anti-Money Laundering Specialists estimates that fraud and bank fraud will cause $485.6 billion in losses worldwide by 2023; that in Europe 80 percent of reported fraud takes place online and that cross-border fraud rates are nine times higher than those of domestic fraud.

Fortunately, financial intelligence units and regulators of major countries are aware of the threat and are taking action, both by “following the money” and educating the public.

A recent example is the successful investigative efforts of Tracfin, the French financial intelligence unit, which froze six times more suspicious transactions in 2023 than in 2021 and 2022 combined, as part of France’s efforts to combat subsidy fraud, VAT fraud and social security fraud.

Payment institutions, normally payment makers (banks, electronic money institutions), must take advantage of all authorities’ directives to improve their detection and prevention systems to stop suspicious payments and report them to the authorities.

And finally, potential victims should be aware of the risk and identify fraud attempts. Recently, some US states (California, Pennsylvania and Connecticut) have begun taking legislative action to force financial institutions to protect their elderly customers by allowing banks and credit unions to suspend or defer payments if the bank suspects exploitation, theft or fraud.

Ultimately, investigators and police depend on victims reporting the crime and financial institutions reporting suspicious activity they observe.

Leonor Vereda
Consultant and former Financial Crime Compliance Officer, UBS
Basel, Switzerland