No excuse to fob off FRAUD victims

In a major boost for our campaign, security minister reveals why banks will soon have . . .

BANKS will soon be unable to claim it is impossible to refund genuine victims of online fraud, according to the Government.

In an interview with Money Mail, security minister Ben Wallace says technology already exists to track down stolen cash and return it to victims. The computer program the banks need is understood to be going through its final stages of tests.

Both Mr Wallace and Amber Rudd, the Home Secretary, have urged the banks to adopt the technology, but firms are treading with caution and will await the results of the tests.

Figures show more than 100 people a day are falling foul of con artists who trick them into transferring money into accounts opened by criminals. Crooks often masquerade as bank staff, telecoms companies or security experts and pretend their victim is at risk of fraud.

Once the customer has been duped, criminals typically move the stolen cash quickly through several bank accounts, before it disappears into the ether. Just £1 in every £4 lost is ever returned to victims because banks say they cannot trace the funds. Up to seven in ten victims are left out of pocket by some banks.

Mr Wallace is adamant that these losses could be avoided. He says he saw computer software tracking payments through various accounts. Once the software from technology firm Vocalink has located the money, it can be frozen before it is withdrawn by a crook.

The minister says he then wants banks to return the cash to victims. Banks have previously claimed they cannot act due to strict data protection rules that prevent them from tracing victims, leaving customers with no way to recover life savings. Some are left tens of thousands of pounds out of pocket.

The security minister says laws were passed in April to remove most of these barriers. While the legislation, in the Criminal Finances Act 2017, will only be fully implemented by March, Mr Wallace says firms should not fear retribution if they use the laws now. He insists the Government will keep working with banks to tackle the fraud epidemic and will listen to concerns.

If they adopt the new technology and then find further legal impediments to repaying victims, the Government will consider making more legislative changes.

The Home Office confirmed that Mr Wallace met representatives of banking trade body UK Finance in July, when he urged banks to adopt the new fraud tracing tools. Ms Rudd also wrote in October to the Joint Fraud Taskforce, of which most big banks are members, asking for an update on its progress.

Mr Wallace says: ‘I don’t recognise the view that it is impossible to get stolen money back to victims. The technology is there. It’s about getting banks to roll it out.

‘In the past, the process [of tracking down stolen funds] was manual and laborious. Now, technology lets you watch on a screen and see money ping around through different banks and sort codes. I’ve told the banks I support the technology and have urged them to adopt it.

‘We have taken steps in the Act to remove the data protection barriers [to returning money to victims]. The only remaining barrier would be whether the money has exited the payments system [such as being withdrawn or spent].’

The security minister also boosted hopes of reuniting past victims with lost savings. Money Mail’s Pay Back Fraud Victims campaign called for £130 million in frozen bank accounts identified as fraudulent to be given to customers left out of pocket.

Some of this money is believed to be traceable to the victims. But banks say by law, they cannot access frozen funds unless the account holder is convicted, or they fear they may be at risk of taking money from someone later proven innocent. Many criminals who own frozen accounts cannot be convicted, as they’ve abandoned the cash and disappeared.

Mr Wallace says: ‘Any of the £130 million in frozen funds should be repatriated to victims if they can be found.’ It is understood the new Vocalink technology has not yet been tested for this purpose.

The Joint Fraud Taskforce, with representatives from the Government, police and big banks, is looking at how powers in the Criminal Finances Act could be used to free up the money and locate victims.

The Government will consider further legislation to help, says Mr Wallace. ‘I’d envisage being able to make any changes [deemed necessary] in about a year’s time, subject to what opportunities I have in Parliament,’ he says.

A spokesman for Vocalink, which is owned by Mastercard, says: ‘The technology being developed by Vocalink Analytics to support the repatriation of proceeds of crime will shortly be assessed by the industry for its applicability.’

Katy Worobec, head of economic crime at UK Finance, says: ‘Banks take fraud seriously and are keen to play their part to enable money to be returned to victims.

‘The industry fully supports the Criminal Finances Act, which will let law enforcement go to court and more easily seize criminal funds frozen in bank accounts.

‘This is a valuable step forward. We are working with the Home Office and law enforcement on how the powers are used to help victims. The industry supports the need to use new technology to help recover stolen money, and is working closely with Government to pilot and test any approach.

‘All parties are in agreement of the need to ensure that banks have the right legal powers to quickly share information to trace fraudsters and recover stolen money.’