Authorised push payment (APP) fraud, a swiftly escalating menace in the digital financial world, leaves its victims burdened with significant financial losses and a deeply violated sense of trust. In these scenarios, innocent individuals are deceived into voluntarily transferring money to accounts controlled by fraudsters. Traditional banking mechanisms have attempted to combat these criminal activities, but the sharp rise in such frauds underlines an urgent need for innovative, proactive solutions.
In the face of APP fraud, where victims are persuaded that the payment they're making is completely legitimate, the solution requires a shift from the conventional. This is where a groundbreaking solution arose from an unexpected forum: the FCA/PSR 3-day Techsprint hackathon.
Abhay Chrungoo from Bugni Labs, joined this effort and , was part of a team of committed professionals armed with a clear vision: to develop a system capable of counteracting APP fraud at its source. The teams expertise in banking and technology played an integral role in crafting a solution that looked beyond conventional fraud detection.
The team analysed real (pseudonymised) data from three banks, applying data-science techniques to uncover a pattern: the Payee's bank – the account where the funds ended up – often held tell-tale signs of mule accounts. Identifying these accounts in real-time would enable the interception of fraudulent transactions before the funds were irretrievably lost.
The team proposed a system of real-time intelligence sharing through existing Confirmation of Payee (CoP) rails, focusing on intelligence, not raw data, to address privacy concerns. This rapid sharing could prompt quick interventions, reducing the number of successful fraudulent incidents.
Moreover, Chrungoo and his team advocated for a shift in liability (reimbursement) models, pushing for a more collaborative approach between Payer and Payee Banks. This change in liability paradigms could drive more proactive efforts in identifying and thwarting potential APP fraud.
This forward-thinking mindset, combined with our proficiency in technology and finance, proved instrumental in formulating this solution. The effort won them the esteemed Jump Solution award, recognising their proactive, innovative approach as a significant leap forward in combating APP fraud.
In summary, while APP fraud poses a significant challenge in today's financial environment, innovative solutions like the one proposed offer hope. With technology and intelligence sharing at its core, this approach paves the way to combat APP fraud, symbolising a beacon of hope in the fight against this issue and stepping towards a safer financial ecosystem for all.
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