Banking

Bank transfers could take four days under new fraud laws


Bank transfers could be delayed for as long as four days to allow for suspected fraud to be investigated under new laws.

The plans are part of a crackdown on one of Britain’s most common scams that sees thousands of victims tricked into sending their savings to fraudsters, who often pose as family members, love interests or promote fake investment opportunities.

Banks currently only have 24 hours to spot and investigate potentially fraudulent payments before they are required to process them and will be given the power to impose a delay of three more days to look into suspicious activity.

The Government said it would “minimise any impact on legitimate payments” from the rules, which could catch out those sending and receiving large one-off payments, such as deposits for house purchases.

It is understood firms will be required to meet a “two stage test” in order to investigate and delay payments. Firstly, they must have reasonable grounds to suspect fraud and secondly they should require more than 24 hours to contact a customer about a suspicious payment.

The additional time for banks and other payment service providers to investigate is hoped will enable them to more thoroughly investigate and stop authorised push payment (APP) scams, which cost victims £485m in 2022, according to lobbying group UK Finance. 

Push payment fraud involves criminals deceiving victims into initiating and authorising a transaction, such as “hello Mum, need cash” texts to parents on WhatsApp that purport to be from their children.

The legislation will give payment service providers a further 72 hours to investigate payments, but only where there are reasonable grounds to suspect fraud or dishonesty that could be out of the ordinary from a customer’s regular financial activity. Firms will use the time to contact the customer and, in some cases, law enforcement agencies.

Bim Afolami, economic secretary to the Treasury, said: “Fraudsters spin whole webs of lies and fabricate all sorts of things to convince people to send them money – this legislation will give banks, other payment service providers and law enforcement more time to get in touch with victims and break the fraudster’s spell before money is sent.

“The Government is absolutely committed to tackling fraud and recognises the impact of this devastating crime on victims – this legislation is another tool in our arsenal to fight fraud,” he added. 

The type of scam accounted for 40pc of all fraud losses in the UK in 2022, according to the Payment Systems Regulator (PSR), and has become increasingly common after the pandemic, with losses up 27pc since 2020 during the first half of last year, the latest UK Finance data shows.

The bill before Parliament is expected to come into force in October and comes on top of a raft of other measures designed to thwart APP fraud. 

Last year, new rules were announced requiring banks to give victims their money back within one working week in cases where the victim was not grossly negligent or played a role in the fraud. Banks will be forced to reimburse scam victims on sums worth up to £415,000, the PSR said in December. 



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