Innovate Finance, an association that advocates on behalf of the Fintech industry in the UK, has issued a statement calling on the UK government to create a National Anti-Fraud Centre to battle the financial fraud crisis. The cost of payments fraud is said to be at least £1.2 billion annually. The fraud also disproportionately impacts lower-income individuals.
In a statement today, the group outlined a plan that claims to have fraud in retreat by 2028.
Innovate Finance CEO Janine Hirt said, “Fraud accounts for over 40% of crime but very little in enforcement resources, given the size of the crisis.”
“…we urgently need a more collaborative, targeted, and effective strategy that aspires to smash fraud in the UK,” said Hirt. “This plan sets out how we can harness technology via data sharing to strengthen collaboration between industry and law enforcement. Current data sharing initiatives, while effective, operate in silos, which can make it difficult in practice. Critically, there is nothing in place with the critical mass or scale required to crush organised fraud. There is widespread agreement that establishing a National Anti Fraud Centre would be the appropriate vehicle to deliver this.”
The concept of shared liability is an essential element of the plan. Frequently, fraud begins via the various social media platforms. Yet currently, these firms have little skin in the game, and thus the penalties typically accrue to the consumer or business and the financial services firms.
The key aspects of the Innovate Finance Plan include:
- A world-first data sharing approach across sectors, regulators, and law enforcement industry, to industrialise the UK’s use of technology to spot and stop fraud and enable all financial firms, large and small, to access and use these solutions. This would build on the existing vibrant small-scale efforts of different data sharing initiatives in the UK.
- Introduce shared liability for social media and telecommunications platforms for fraud originating on their platforms and networks, where most frauds occur. This includes strengthening the Online Safety Act.
- Building a world-beating UK anti-fraud tech industry, which can create jobs and growth and export solutions
Shared liability means that big tech and social media companies will take the issue more seriously. Innovate Finance notes that currently 77% of Authorised Push Payment (APP) fraud originates online with social platforms the single largest source of fraud origination. By one estimate, fraud originating from Meta (Facebook/Instagram/WhatsApp) constitutes 60.5% of all fraud reports received.
Marko Maras, CEO at Trustfull, says the fight against fraud is a shared one, and success will only happen if financial institutions, consumers, and social media create a united front to fight the crime.
“Criminals often use the same strategies to target multiple financial institutions in quick succession. By improving data sharing on these tactics, and the suspicious phone, email, IP addresses and domains used by cybercriminals, financial institutions will be better placed to identify potential bad actors operating on their platforms – allowing for early intervention before it is too late,” said Maras. “Within the EU, we have seen similar principles being applied to prevent money laundering and terrorism financing, with Article 75 of the Anti-Money Laundering Regulation enabling greater cross-sector and cross-border information sharing to spot suspicious patterns and users faster across the financial ecosystem.”
Maras noted that concerns regarding GDPR compliance and data protection do come with increased information sharing but with adherence to data laws this sharing can clamp down on fraud while protecting consumer rights.