Anti-Money Laundering News and Information

Banks, regulators warn of wave of coronavirus scams in UK, U.S.

UK banks are stepping up fraud prevention measures to protect customers from scammers eager to exploit the coronavirus pandemic with a whole range of new tricks, including fake sales of medical supplies and bogus government relief schemes.

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With British households effectively on lockdown, some banks said customers had already been caught out by fraudsters posing as banks, government and even health service providers to persuade victims to hand over passwords or other sensitive data.

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Fraud is also on the rise in the United States, where regulators have warned about investment and data theft scams.

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In the UK, Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland have launched social media campaigns to flag ploys. Metro Bank said its fraud team was still operating a 24-hour, seven-day service to help affected customers.

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The banks said scammers were using a range of methods to prey on people. Common “phishing” emails, authorised bank transfers and schemes involving fake buying or selling of goods or services are on the rise, alongside more sophisticated “payment diversion” frauds, designed to coax businesses to part with large sums of cash.

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One such example flagged to Reuters called on business owners to make a 25,000 pounds ($29,370) payment to a fake government support initiative called “The Central Employers Scheme” set up to cover sick pay during the outbreak.

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A UK banking source said another victim made a significant payment to a “COVOID Bond”, also fraudulently linked to the UK government.

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The banks said such typographical errors were often made deliberately by scammers to lend authenticity to the request, particularly if the sender was posing as a chief executive or colleague demanding the recipient took quick action.

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The UK banking source said another customer was persuaded via email to send a cross-border payment to a scam account after fraudsters said the legitimate account had been “frozen by the Greek Government.”

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“This virus won’t stop bad actors and fraudsters, if anything, it will encourage them. I am much more nervous about this today than ever,” Richard Meddings, chairman of retail bank TSB, told Reuters.

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“People will be at home, receiving phone calls and texts from people who claim to be their banks, asking them about cancelled events and travel plans and offering refunds. Fraud can only go up under these kinds of circumstances,” he said.

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Figures published earlier this month by trade body UK Finance showed around a quarter of the 456 million pounds ($535.2 million) of authorised bank transfer fraud was returned to victims across the industry last year. TSB, the only UK bank to offer a Fraud Refund Guarantee, has returned 99% of losses to its customers since April.

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In the United States, the U.S. Federal Deposit Insurance Corporation, the regulator which insures customer deposits, last week said fraudsters were exploiting popular anxiety and confusion to steal personal data, such as birthdays and Social Security numbers, through texts and social media.

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Many U.S. banks have cut branch hours or are pushing customers to use online banking to mitigate the spread of the coronavirus. That has created opportunities for scammers who, impersonating FDIC officials, have urged depositors to hand over their data, saying their current lender is about to collapse.

By Lawrence White and Sinead Cruise, Reuters, 24 March 2020 Photo (cropped and edited): mattbuck / CC BY-SA 2.0

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Published on KYC 360, 25 March 2020

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