Published on 2nd February 2023
Fintech has been lionized by the government and financial authorities as a dynamic new sector of the UK economy, bringing new offerings and competition: next stop is cryptocurrency, the enabling legislation for which is going through Parliament.
The sector is ostensibly very concerned about financial crime, and its main trade body – The Payments Association – recently kicked off Project Financial Crime, sponsored by IT vendor Form3 and with the participation of eighteen Fintechs, including Mastercard, allpay and Vyne.
We have today challenged the Fintech sector to first bring its existing practices into line with the current regulatory regime for financial crime (known as AML/CFT: anti-money laundering and combatting the financing of terrorism).
We have issued an open letter to the project describing three practices in detail that fall short of AML/CFT standards and allow criminals to obtain accounts, International Bank Account Numbers and access to payment systems.
The three practices are widespread, are used cumulatively, and have no basis: they are loopholes created by Fintechs in the AML/CFT regime and exploited to their maximum. One upshot is payment scammers controlling chains of accounts through which they can move their stolen money quickly, bypassing any checks, and out into the ether. They are a contributory factor to Authorised Push Payment Fraud.
Eliminating these practices would demonstrate the Fintech industry’s commitment to a full and proper implementation of AML/CFT regulations from the ground up. The apparent scope set by The Payments Association for Project Financial Crime, however, is different and will in our view have little substantive effect if these practices are not eliminated.
This is an important issue. If Fintechs cannot eliminate these practices they should close down rather than help to underpin the scourge on wider society that financial crime represents.