LONDON — Banks in Britain will be allowed to hold up payment transfers for an extra three days if they have grounds to suspect a customer is being conned by fraudsters, the finance ministry said on Tuesday.
Regulators are cracking down on ‘authorized push payment’ fraud, or when scammers trick people into transferring money to them.
The finance ministry said it will publish draft legislation on Tuesday to give payment services providers, such as banks, a further 72 hours on top of the current end of next business day deadline, for processing a payment if there is reasonable grounds for suspecting a fraud or dishonesty.
This gives banks a better chance of stopping money being sent to fraudsters, the ministry said, adding that the new rule will be in force by Oct. 7.
The start date coincides with action being taken by the Payment Systems Regulator to require banks and other payment firms to reimburse customers hit by push-payment fraud to a maximum of 415,000 pounds ($531,283.00) from October, split between the sending and receiving banks.
Britain has seen an increase in authorized push payment fraud over the past few years, with victims losing 485 million pounds to these scams in 2022, the ministry said. — Reuters