Hong Kong banks gain new scam-fighting powers

[WORLD] Effective December 8, 2024, Hong Kong banks have been granted new authorities to trace and flag suspicious accounts linked to fraudulent activities, aiming to bolster consumer protection and curb the rising tide of digital scams.

Expanded Alert Mechanism

The Hong Kong Monetary Authority (HKMA), in collaboration with the Hong Kong Police Force and the Hong Kong Association of Banks (HKAB), has broadened the scope of the Suspicious Account Alert system. Initially introduced in November 2023 to cover transactions using Faster Payment System (FPS) proxy IDs, the mechanism has been extended to encompass Automated Teller Machine (ATM) transactions, including cash deposits. This expansion, effective from December 8, 2024, involves 22 participating banks implementing the alert system at their ATMs. Customers will receive fraud risk alerts if the recipient's account details match "High Risk" labels in the Police's Scameter database. ​

Rising Digital Fraud Concerns

The urgency of these measures is underscored by a significant surge in digital fraud cases. In 2023, digital fraud incidents increased by 43% year-on-year, totaling nearly 240,000 cases with losses amounting to HK$9 billion. The trend continued in 2024, with 24,000 cases reported in the first seven months, resulting in HK$5 billion in losses—a 12% rise compared to the same period in the previous year. ​

Strengthening Anti-Fraud Measures

Beyond the alert system, authorities are exploring broader powers to combat scams. The Financial Intelligence Evaluation Sharing Tool (FINEST), launched in June 2024, facilitates information sharing among banks regarding suspicious transactions. Currently focusing on company accounts, there are discussions about extending this to personal accounts, given that nearly 90% of mule accounts involved in fraud are individual accounts. ​

Public Advisory

The HKMA advises the public to verify payment details and the recipient's identity before proceeding with transactions. If uncertain, individuals should terminate the transaction immediately. Additional recommendations include downloading mobile applications only from official sources, being cautious of fraudulent links, and safeguarding personal information. ​

These enhanced measures reflect Hong Kong's commitment to adapting its financial regulatory framework to the evolving landscape of digital fraud. By empowering banks with greater tools to monitor and report suspicious activities, authorities aim to protect consumers and maintain the integrity of the financial system.