Business

Banks get power to delay fraudulent payments

The finance ministry announced the proposal on Thursday, aimed at reducing the estimated £460 million lost to fraud over the past year.

Under the new laws, banks would be allowed to pause transactions for up to 72 hours if they have reasonable grounds to believe the payment is linked to fraud. (Representational image: iStock)

By: EasternEye

BRITAIN is proposing new laws to give banks more authority to delay and investigate payments they suspect may be fraudulent.

The finance ministry announced the proposal on Thursday, aimed at reducing the estimated £460 million lost to fraud over the past year.

Under the new laws, banks would be allowed to pause transactions for up to 72 hours if they have reasonable grounds to believe the payment is linked to fraud.

Currently, banks are required to either approve or reject a payment by the end of the following business day.

“Hundreds of millions of pounds are lost to scammers each year, targeting vulnerable communities and ruining the lives of ordinary people,” economic secretary to the treasury Tulip Siddiq said in a statement.

“We need to protect these people better, which is why we are giving banks more time to investigate suspicious payments and break the criminal spell that scammers weave.”

The finance ministry highlighted an increase in so-called ‘romance scams’, where fraudsters exploit vulnerable individuals by faking romantic relationships to steal money.

Fraud now accounts for over a third of all crime in England and Wales.

Ben Donaldson, managing director of Economic Crime at UK Finance, welcomed the additional time for banks to act.

“This could potentially limit the psychological harms that these awful crimes can cause and stop money getting into the hands of criminals,” he said.

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