Hong Kong to use three-pronged approach to fight growing fraud

HONG KONG (China Daily/Asia News Network): The Hong Kong Monetary Authority pledged to combat financial fraud by requiring banks to share information, monitor financial transactions in real-time, and provide customer alerts when the number of cases of financial fraud in Hong Kong is increasing.

The HKMA said it received 954 fraud-related banking complaints in the first nine months of this year, already exceeding last year’s total case number of 555.

Seventy per cent were related to credit card transactions, and the remaining 30 percent were related to remittance transactions, payment transactions and bank loans.

However, the growth rate of such cases is disturbing, as those cases surged 1.7 times annually in the first quarter of this year. In the third quarter of this year, these cases were up 1.3 times compared to a year ago.

HKMA also said that in one recent month, there were more than 10 fraud cases involving the hacking of residents’ accounts of instant messaging software, such as WhatsApp, by criminals.

The situation is like a friend sending a text message requesting a transfer of money.

Looking ahead, HKMA will refer to the guidelines of the Financial Action Task Force and international experience to expand information-sharing to other financial crime types such as trade-based money laundering.

In the next two months, HKMA will consult the industry and the public regarding the expansion of information sharing scope from corporate accounts to personal accounts

“It is very dangerous to click those links embedded in the message. The public should keep one-time passwords and other information.

They should also verify with the other parties first when receiving such messages of asking for a money transfer,” HKMA deputy ehief executive Arthur Yuen Kwok-hang said at the Thursday (Oct 12) news conference.

“It is difficult to predict the situation after the introduction of relevant anti-fraud measures, but I believe that by providing warnings, the chance of customers being deceived can be reduced.”

The HKMA on Thursday issued a circular to 28 retail banks in Hong Kong requiring these banks to provide sufficient resources and expertise to combat financial fraud through sharing information, monitoring transactions and providing alerts to customers.

Regarding information-sharing, HSBC, Hang Seng Bank, Standard Chartered Hong Kong, Bank of China (Hong Kong) and ICBC (Asia) in June joined the Bank-to-Bank Information Sharing Platform, in which these five major banks in the city share information on suspicious corporate accounts that can help detect fraud and financial crimes.

Looking ahead, HKMA will refer to the guidelines of the Financial Action Task Force and international experience to expand information-sharing to other financial crime types such as trade-based money laundering.

In the next two months, HKMA will consult the industry and the public regarding the expansion of information sharing scope from corporate accounts to personal accounts.

In line with HKMA requirements, 28 retail banks in Hong Kong in September have implemented a real-time fraud monitoring system to stop funds from being deposited into fraudsters’ accounts.

These 28 retail banks that have deployed the monitoring system cover nearly 90 percent of retail banking customers.

In the future, the HKMA will ask banks gradually to include more information, such as nontraditional data, and apply network analytics to bring closer monitoring of suspicious accounts and networks that can prevent fraud at the source.

The third measure is the provision of suspicious proxy alert in the Faster Payment System linked to the Scameter — the anti-fraud search engine designed by the Hong Kong Police Force.

An alert message will be displayed to the user before payment confirmation where the payee’s FPS proxy ID matches the list of proxy IDs labeled as “high risk” on the Scameter.

More than 40 banks and stored value facility licensees are expected to join the initiative, which is expected to roll out in the coming two months when they finish the work of system enhancement and testing.