Bank Of Lithuania Introduces New Fraud Prevention Guidelines

May 1, 2024
Payments and electronic money institutions will be subject to new guidelines issued by the Bank of Lithuania intended to prevent payments fraud.

Payments and electronic money institutions will be subject to new guidelines issued by the Bank of Lithuania intended to prevent payments fraud.

The new Fraud Prevention Guidelines will offer new insight into managing and mitigating risks associated with fraudulent activities, and cover various aspects such as monitoring payment transactions, responding to notifications, liability and indemnification. 

"As the scale of financial fraud grows, so does the role of payment service providers in managing this threat as they are one of the most important lines of defence,” said Simonas Krėpšta, a member of the board of the Bank of Lithuania.

Krėpšta said that the new guidelines have incorporated the experience that the central bank has gathered through inspections, dealing with consumer disputes and complaints. 

“This is a practical guide that we've put together after evaluating both good and bad practices, which we hope will help limit the actions of fraudsters.” 

The guidelines include implementing robust organisational and technical measures, promptly detecting and responding to fraudsters' attacks, and proficiently managing associated risks. They come into effect today (May 1), and affect all payment service providers (PSPs) supervised by the regulator. 

To ensure consistent understanding and application of the guidelines among PSPs, the Bank of Lithuania will host a consultation event on May 23, focusing on the practical implementation of the guidelines and giving examples of best practice. 

The guidance will undergo regular updates to ensure relevance and efficacy, the central bank said.

Emphasising the importance of carefully scrutinising complaints related to potential fraud, financial institutions are encouraged via the new guidelines to analyse complaints diligently to develop profiles and typologies of fraudsters, which the Bank of Lithuania says will create better recognition and prevention of fraudulent activities.

Furthermore, PSPs are advised to employ technological tools for identifying unusual customer behaviour, monitoring transactions both in real time and retrospectively, and detecting suspicious transactions promptly. 

The Bank of Lithuania has said that financial institutions must also ensure their accessibility to customers outside regular working hours, facilitate the immediate reporting of potential fraud cases and enable swift actions such as blocking payment cards or transactions.

The bank also highlighted financial literacy as a crucial aspect of fraud prevention, with PSPs urged to circulate information about common fraud methods, indicators of unreliable websites and recommendations for safeguarding against fraud, whether through their websites or social media channels. 

The central bank has also advised that this information should be regularly updated to remain relevant and effective.

Meanwhile, if PSPs receive complaints about payment transactions or requests for refunds, the regulator said that it is “extremely important” that all complaints about disputed payment transactions are examined individually, without prejudice, and that decisions are made after a detailed assessment of all the circumstances of the execution of a specific payment transaction.

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