As the plague of fraud spreads around the world, Forbes in May last year ran an article that described the phenomenon as a “scamdemic.”
Loopholes in financial governance are available with the speed and anonymity of the Internet, and the rapid transfer of money made possible by financial and communications technology.
The British government has responded to the crisis by stepping up its efforts to hold Internet service providers and banks to account. The BBC in 2021 said that fraud would grow by 30 percent each year, and indeed the Fraud and Cyber Crime Report published by money.com.uk showed that fraud losses in the UK last year totaled more than ￡4 billion (US$4.9 billion) — a 67 percent increase from ￡2.4 billion in 2021.
In 2019, the British Payment Systems Regulator required banks, via their own codes of practice, to protect customers by putting a reasonable delay on remittances. The rationale for the move is that delays on abnormal transfers would provide a cool-off period for clients and give banks more time to block suspected fraud.
Australia is also facing rising fraud. Its losses last year exceeded A$3.1 billion (US$1.98 billion) — an 80 percent increase from 2021. The Australian government last year provided A$8.9 million to set up the Joint Policing Cybercrime Coordination Centre and in July established the National Anti-Scam Centre, which aims to “make it harder for scammers to take money and information from Australians.”
Most Australian banks have their own anti-fraud departments, but the latest data released by the Australian Investments and Securities Commission show that banks blocked a mere 13 percent of fraud-related payments.
The commission has instructed banks to follow the UK’s example by taking stronger measures to block abnormal financial activity.
Taiwan’s fraud-blocking model employs cooperation between financial institutions and the police, with the Financial Supervisory Commission (FSC) and police using on-the-spot interventions at bank counters in all 368 townships, cities and districts. In the first half of this year, their efforts blocked a record NT$3.378 billion (US$105.16 million) of payments.
Taiwan’s methods to block Internet transfers can be upgraded to follow the examples of the UK and Australia by delaying abnormal online transfers, giving more time to block them.
In addition, the National Police Agency’s 165 Anti-fraud Hotline and the Project Eagle Eye fraud detection and prevention system, which is a collaborative project by Taipei Fubon Bank and the FSC, would enable earlier detection of abnormal activity. This would allow blocking operations to focus on a deeper level, cracking second and third-layer accounts that fraud syndicates go to great lengths to protect.
Because the deep accounts have no record of direct remittances from people who have been defrauded, it is not common for them to immediately be put on watch lists. This is because second and third-level accounts can only be discovered through retrieval and analysis by police personnel.
There is an urgent need to give banks the authority to use Internet tools to compile identification data and provide it to the police, instead of relying on analysis by police personnel. Only then would it be possible to effectively unearth the behind-the-scenes money-laundering centers used by fraud syndicates.
Such measures would make it harder for the “scamdemic” to spread in Taiwan.
Lin Shu-li is an officer of the National Police Agency’s Criminal Investigation Bureau.
Translated by Julian Clegg
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