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Daily Dash: New Data Exposes Extent Of US Romance Scams

February 10, 2023
The US Federal Trade Commission has issued new information regarding romance scams, while the Bank of Lithuania has sanctioned an e-money firm for money laundering failures.

FTC Unveils Top Romance Scam Lies Told To Americans

Almost a quarter of the Americans who lost money to a romance scam were asked to send money because "a friend or relative was sick, hurt or in jail", new data by the US Federal Trade Commission (FTC) shows.

The next most commonly reported lie was that the scammer had great investment advice to share with their newfound romantic interest, followed closely by the lie that the scammer was in the military, or that they needed help making some sort of important delivery.

The FTC data spotlight also noted the growing tactic of “sextortion” used by romance scammers, whereby a romance scammer convinces a consumer to share explicit photos and then threatens to share those photos with the consumer’s social media contacts.

Around 70,000 people fell victim to romance scam in the US in 2022, costing them altogether $1.3bn in losses.

According to the spotlight, social media is still the most used platform by romance scammers to initiate new contacts.

One-third of the losses were sent via crypto, while another quarter was sent through bank transfers. Payment apps were used to transfer only 3 percent of the amount lost.

No New Clients For You, Bank Of Lithuania Tells Railsr Subsidiary

Lithuania’s central bank has taken action against an electronic money institution, PayrNet, which is owned by software firm Railsr. 

There is reason to suspect that the institution is “grossly and systematically violating” money laundering laws, according to the Bank of Lithuania. 

After assessing the nature, extent and other aspects of possible violations, the central bank has received legal clearance to prevent the firm from establishing business relations with new clients, as well as with intermediaries and persons distributing and/or redeeming electronic money of this institution. 

Last week, the central bank announced that it had revoked the licence of the payments institution, Shift Financial Services, which was also due to money laundering failures. 

US Treasury Assesses Cloud Adoption In Financial Services

The US Department of the Treasury has released a first-of-its-kind report on the potential benefits and challenges associated with the adoption of cloud-based technology in financial services.

The report found that cloud services could help financial institutions become more resilient and secure but that there are some significant challenges.

For instance, banks said they do not often receive details of incidents or outages affecting their systems and they are worried that a cyber incident at a cloud provider may potentially have a cascading impact across the broader financial sector.

Additionally, they said that the patchwork of global regulatory and supervisory approaches to cloud technology can make it “nearly impossible” for US financial institutions to adopt cloud consistently at a global scale.

“There is no question that providing consumers with secure and reliable financial services means greater demand for cloud-based technologies,” said Wally Adeyemo, deputy secretary of the Treasury. 

“By building trust, cooperation, and collaboration at the outset, we can promote safe and effective migration for financial institutions that choose to adopt cloud services.”

EBA De-risking Guidance Risks Undermining Payments Account Directive, Warns Banking Group

De-risking guidelines that have been issued by the European Banking Authority (EBA) contrast with requirements in the EU’s Payments Accounts Directive, the Wolfsberg Group, a bank association for 13 global banks, has said in response to the EBA’s de-risking consultation. 

“We are concerned that the imposition of targeted restrictions on financial products and services by FIs [financial institutions] will create tension with Article 17 of the Directive 2014/92/EU,” the group said in a letter to the EBA. 

Article 17 of the directive outlines the characteristics of a basic payment account. 

“The potentially adverse impact on customers’ needs to be considered before the guidance is finalised.”

The bank association notes that transactional restrictions can be circumvented by criminals opening accounts with multiple banks, depriving any one institution of a full picture of the customer’s activities. 

“This ultimately makes it harder for law enforcement to follow the money,” the group said, adding that the EBA should avoid “unintended consequences”. 

Among other things, the Wolfsberg Group has advised that the EBA adopts the same de-risking definition as the Financial Action Task Force (FATF).

India Proposes Extending UPI To All Inbound Travellers

The Reserve Bank of India (RBI) has proposed that the Unified Payments Interface (UPI), the country’s instant payments system, be opened up to all inbound travellers from overseas.

Initially, this facility would be extended only to travellers from G20 countries arriving at select international airports. Going forward, however, it would be enabled across all other ports of entry.

The move would build on an earlier decision, announced last month, to open up UPI to non-resident Indians (NRIs) who normally live abroad in one of ten countries linked to the scheme.

RBI governor Shaktikanta Das said the bank will provide more details on its proposal “shortly”.

FCA Asks Crypto Firms To Prepare For New Financial Promotion Rules Now

The UK Financial Conduct Authority (FCA) urges crypto firms to start preparing for the upcoming financial promotion regime because those failing to comply may face criminal charges and even prison.

The FCA states that all crypto asset firms marketing to UK consumers, including firms based overseas, will soon need to comply with the new UK financial promotions regime.

“Firms must start preparing now for this regime. We will take robust action against firms breaching these requirements.”

The statement builds on the UK government’s plans to bring certain crypto promotions within the FCA’s remit and create an exemption for those crypto businesses that are registered with the FCA under the Money Laundering Regulations.

Once the regime gets parliamentary approval, firms will have four routes to communicating crypto-asset promotions to UK consumers. Those that promote crypto in any other way may face criminal charges that could lead to up to two years' imprisonment, the FCA warns.

“We will take robust action where we see firms promoting crypto assets to UK consumers in breach of the requirements of the financial promotions regime,” the regulator said.

Bank Security Flaws Failing Consumers, Warns Which?

Basic security flaws on some of the biggest banks’ websites and apps are putting consumers at increased risk of falling victim to fraud, research by consumer organisation Which? has found.

The research found that several banks were missing basic online and mobile app protections.

“Banks should not be leaving these open doors for scammers to exploit and must up their game to protect their customers properly,” said Which? spokesperson Sam Wood. “By making improvements, such as blocking weak passwords, banks can take an important step in preventing unscrupulous fraudsters from attempting to steal money and personal data from consumers.”

Working with security experts, Red Maple Technologies, Which? tested the customer-facing security systems of 13 current account providers from September to November 2022. 

The banks were scored across four key categories — login; navigation and logout; account management; and encryption — for both their online banking security and app security.

Virgin Money got the lowest total scores for online and app banking, at 52 and 54 percent respectively. 

Starling Bank, meanwhile, scored highest.

RBI: Almost 2m Subsidised QR Code Terminals Supplied Since 2021

The Reserve Bank of India (RBI) has released new data showing the progress of the Payments Infrastructure and Development Fund (PDIF), a scheme that subsidises point of sale (POS) and QR code terminals.

Since its launch on New Year’s Day 2021, the PIDF has provided 1.82m QR code and 485,000 POS terminals to merchants nationwide.

So far, the PIDF has invested ₹7.8bn ($94m) in the scheme. About 75 percent of the total outlay has been covered by card networks, issuing banks and sponsor banks, while the remaining 25 percent has been covered by the RBI.

For POS terminals, merchants can reclaim 60 to 75 percent of the cost, and for QR code terminals merchants can reclaim 75 to 90 percent of the cost. The PIDF scheme will continue to run for one more year (through 2023), and may be extended for another two years thereafter.

US Congressman Creates Anti-ESG Working Group

Patrick McHenry (R-NC), chairman of the House Financial Services Committee, has set up a Republican working group aimed to “combat the threat to our capital markets posed by those on the far-left pushing environmental, social, and governance (ESG) proposals”.

The group's goals include to rein in an ongoing climate disclosure initiative by the Securities and Exchange Commission (SEC), which Republicans see as a prime example of regulatory overreach.

The group will also work to “reinforce the materiality standard as a pillar of our disclosure regime” and hold to account market participants who “misuse the proxy process or their outsized influence to impose ideological preferences in ways that circumvent democratic lawmaking”.

The working group will coordinate Republicans’ response to ESG efforts through education and policy development among party members.

Commenting on the action, McHenry said: “Progressives are trying to do with American businesses what they already did to our public education system — using our institutions to force their far-left ideology on the American people. 

“Their latest tool in these efforts is environmental, social, and governance proposals. This is why I am creating a Republican ESG working group led by Oversight & Investigations Subcommittee chair Bill Huizenga.”

Swiss Open Investigation Into Credit Suisse Leak 

An investigation has been launched into the leak of the details of 18,000 accounts at Credit Suisse last year, Switzerland’s federal prosecutor has confirmed. 

The investigation, first uncovered by a local newspaper, will probe corporate espionage and breaches of the country’s Bank Secrecy Act. Under this law, Swiss citizens can serve up to five years in prison if they disclose or publish information on Swiss bank account clients. 

The leak last year was made after a whistleblower sent information on several Swiss bank accounts, including those of criminals and oligarchs, to news outlets including the New York Times, the Guardian and Le Monde. 

UK CBDC Could Launch By 2030, Say Treasury, BoE Officials

This week, HM Treasury and Bank of England officials are expected to say that a UK central bank digital currency (CBDC) could launch by 2030, should they decide to pursue a “digital pound”.

According to a report in The Telegraph, officials will say that CBDC is “likely” to launch in the UK, due to the continued decline in the use of cash. However, they will also say that cash will “sit alongside” a future CBDC.

Last month, HM Treasury began hiring for a Head of Central Bank Digital Currency, a new post on a two-year contract.

Also last month, former Bank of England governor Mervyn King cautioned against a UK CBDC, saying it would come with “risks but no obvious benefits”. He added that the UK’s digital payment systems are already robust without the need for CBDC.

Judge Throws Out Coinbase Case

A US District Court judge has dismissed claims from plaintiffs that Coinbase sold unregistered securities and failed to register as a broker-dealer.

The class action suit was seeking damages related to the sale of digital assets.

In this instance, Judge Paul Engelmayer of the Southern District of New York ruled that regardless of whether the assets were securities, the crypto giant’s user agreement "flatly contradicts" the suit's claim that the firm holds title to the assets that are traded on its exchange.

Engelmayer also said that amendments that had been made to the complaint by plaintiffs included “numerous allegations” that contradicted the original complaint.

FCA Blocks Thousands Of Misleading Ads

The UK’s Financial Conduct Authority (FCA) required firms to amend or remove 8,582 promotions in 2022 ,14 times more than 2021, a report has revealed.

In 2021, the number of promotions targeted was 573 and the year before that, just 207.

According to the FCA, there was an increase in the use of bloggers and influencers on social media last year. 

These "fin-fluencers" were promoting financial products, particularly investment products, to younger age groups. 

The FCA also observed the ongoing trend in the number of bloggers promoting credit on behalf of unauthorised third parties, with a particular growth in financial promotions targeting students. 

Although the FCA currently lacks the legal powers to require promotions on social media to be taken down, the regulator said that it has worked closely with bigtech firms such as Alphabet, Meta and TikTok, requesting that they remove harmful content.

“Our expectations remain the same. Financial promotions must be fair, clear and not misleading,” said Sarah Pritchard, the FCA’s markets chief. “What has changed is the FCA’s approach.” 

Pritchard said that the watchdog has drawn on better technology to suss out poor quality or misleading ads quicker. 

“This year, we will continue to put pressure on people using social media to illegally promote investments, which put people’s hard-earned money at risk.”

Chile Migrates To ISO 20022 In Early 2024

Aligning with global efforts to migrate to the ISO 20022 standard, the Central Bank of Chile (BCCh) has announced plans to adopt the data-rich messaging format in the first trimester of 2024.

The announcement notes that this aligns with SWIFT plans to start using the new ISO 20022 standard in March this year, which will coexist with the current SWIFT FIN messaging service until November 2025.

The migration will take place on Chile’s high-value RTGS system called LBTR. According to central bank data, LBTR processed 433,000 transactions in 2022, with a total value of $13tn, which represented a 5 percent decrease in volume and a 18 percent increase in value compared with the year before.

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