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United Kingdom: CoP Phase 2 Kicks Off On May 31
A wider group of payments firms will be able to use Confirmation of Payee (CoP) as the fraud prevention tool moves to its second phase on May 31.
The Payment Systems Regulator (PSR) has issued a final decision and specific direction for the implementation of phase 2 of CoP, which will require more payment firms to offer the service.
CoP is an important tool to fight authorised push payment (APP) fraud, whereby a fraudster tricks a consumer or business into sending money to a wrong account.
APP scams cost UK bank customers £355m in the first half of 2021, overtaking card fraud losses for the first time.
To reduce APP scams and misdirected transfers, CoP alerts consumers in case the recipient's account name does not match the name of the intended beneficiary.
In the first phase of CoP implementation, the PSR directed the six largest banks to implement the service. The call for views review of the first phase of CoP closed on a positive note and the PSR is now seeking to expand the service to enable more financial institutions to join the service.
The final decision ensures the technical and system requirements for phase 2 are implemented by May 31, at which point Pay.UK will close the phase 1 environment.
China: Central Bank Issues AML Fines
Just one week after announcing a multi-agency effort to strengthen enforcement against money laundering, the central bank of China has imposed two fines worth CNY32.4m (£3.75m) for anti-money laundering (AML) violations.
According to Reuters, the People's Bank of China (PBOC) imposed a CNY22.37m (£2.6m) fine on Ant Group-backed MYBank for violations in credit scoring management and transacting with unidentified clients.
The PBOC found that MYBank did not follow know your customer (KYC) requirements and instructions to report suspicious transactions.
In a separate case, the central bank reportedly imposed a CNY10.04m (£1.17m) on third-party payments provider 99Bill over four sets of breaches. These included KYC failures and insufficient clearing management.
Last week, the China Securities Regulatory Commission, along with ten other Chinese authorities, began a combined three-year nationwide campaign, running until December 2024, to counter money laundering, as reported.
Europe: UK Fintechs And European Banks Complete First Cross-Blockchain Pilot Transaction
Three UK fintechs and two European banks have successfully conducted a proof of concept (POC) for the first cross-chain pilot debt transaction on the public Ethereum and Fnality Payment System.
The POC involved fintechs Fnality, Nivaura and Adhara, as well as banks NatWest and Santander.
As part of the pilot, the participants issued a tokenised security on a public blockchain, with the payment leg conducted through a new distributed ledger technology (DLT) enabled payments system.
It represents an important step in Fnality’s efforts to launch its first Fnality Payment System (FnPS) later this year, which will enable wholesale payments in real-time with near-instant settlement in a central bank money-backed digital cash asset.
UK: COVID-19 Impacts Current Account Switching Rates
Analysis of the Current Account Switch Service (CASS) over the last three years has shown the COVID-19 pandemic has led to significant lower rates of switching bank accounts between UK consumers.
Figures from 2019 show the number of monthly switches using CASS typically ranged between 75,000 and 100,000, equating to around 1m switches a year. This was followed by a sudden drop in the number of switches in the first quarter of 2020 to around 25,000. Although the total number of switches in 2021 was above 2020 levels, albeit still well below the 2019 number, there is evidence of two further downwards trends during the second and third UK lockdown periods.
Although this drop was undoubtedly caused by COVID-19, there are multiple possible explanations to account for this. For example, many consumers may have sensibly just decided that a global pandemic was not the ideal time to switch where they held their money.
However, although the overall number of CASS switches fell during the height of COVID-19 in 2020, this mostly affected incumbent banks, with challenger banks such as Monzo and Starling continuing to pick up customers switching accounts.
This suggests that the drop might also have been due to a lack of incentives incumbent banks were prepared to offer consumers to switch at a time when their risk appetite for new business was potentially low.
