Malta Sees Growing Trend of Bank Account Hacking

Sophisticated Tactics Used by Scammers

Malta’s financial services arbiter, Alfred Mifsud, a former Central Bank deputy governor, has warned of a growing trend of bank account hacking by third parties in the country. According to data provided by the police to the Office for the Affairs of Financial Services (OAFS), over 1,000 individuals in Malta have fallen victim to such scams, resulting in a loss of €20.8 million between 2022 and 2023.

Scammers are using sophisticated tactics, including:

• Impersonating banks, their customer care mobile numbers or websites
• Emotional manipulation to leave victims financially and psychologically distressed

Financial Losses and Recovery Challenges

The OAFS reported that the financial losses from these scams can range from a few hundred euros to several thousand. Victims often find themselves in a difficult position after banks’ efforts to retrieve fraudulently withdrawn money rarely succeed. This has led some account holders to turn against their banks, arguing that they should have implemented measures to alert customers about the dangers of engaging with hackers.

Addressing the Issue: Apportioning Liability

To address this issue, the arbiter devised a model to apportion liability for financial losses sustained between banks and account holders. The model has been well-received by Malta’s largest banks and has attracted interest from financial ADR forums across Europe and internationally.

Key features of the model include:

• Initial 90% responsibility attributed to the bank in cases where gross negligence is involved
• Special circumstances that make fraudulent messages appear genuine

Investment Fraud on the Rise

The OAFS also reported that investment fraud, particularly those involving crypto-assets, has significantly risen in recent years. Scammers are exploiting the hype surrounding these technologies to deceive investors, with social media platforms serving as a breeding ground for various types of fraud.

A Daunting Task: Recovering Stolen Funds

In one case, a victim received an SMS message, clicked on a link and provided login credentials on a website mirroring a bank’s online domain, resulting in two payments being made and defrauding them of €19,150. However, the recovery of funds lost to scams remains a daunting task for victims, with irreversible transactions such as crypto-assets making it particularly difficult to retrieve stolen money.

Effective Resolution

The model’s effectiveness is evident, with most new cases being resolved without formal adjudication, either at the pre-mediation or mediation stages. Banks are also proactively applying the model’s principles, demonstrating a commitment to resolving disputes fairly and efficiently.