Financial Crime World

Cashless Society Brings New Wave of Concerns

Sweden’s transition to a cashless society has gained momentum, but it has also raised concerns about the impact on vulnerable members of society and the potential for increased fraud.

Fraud on the Rise

The Swedish National Council for Crime Prevention has reported a doubling of benefit fraud cases since 2014, with over 23,000 reported incidents last year. The number of fake notes submitted to police hit a record high in 2020 before dropping slightly in 2023.

  • The lack of knowledge about what a banknote looks and feels like is decreasing, increasing the risk of counterfeits spreading.
  • Experts warn that as fewer people use cash, this knowledge will continue to decline, making it easier for criminals to produce fake notes.

Government Response

The Swedish government has summoned banks to a meeting to discuss fraud and is reviewing security protocols. The telecoms authority has also been instructed to crack down on spoofing.

  • Niklas Wykman, Minister of Financial Markets, emphasizes the need to stop criminals from using the financial system to enrich themselves or finance other crime.
  • The government is taking steps to ensure that vulnerable individuals are protected from fraud and exploitation.

Concerns in the UK

The UK is also experiencing concerns about the impact of a cashless society on vulnerable individuals such as the elderly and those in abusive relationships who rely on cash. Last year’s payment failures at major supermarkets Sainsbury’s and Tesco highlighted the potential for chaos if targeted malicious attacks occur.

  • Björn Eriksson, a former head of Interpol, warns that the Russian invasion of Ukraine has changed minds about how safe card payments are, citing national security concerns.
  • The UK has not been immune to cashless society issues. According to industry body UK Finance, 21.6 million consumers used cash only once a month or not at all in 2022.

Globally, cash use declined by four percentage points in 2022, according to a McKinsey report.

  • The quick growth of banks and fintechs can leave customers more vulnerable to fraud as systems are developed at speed.
  • Experts warn that the reimbursement requirements could limit development and innovation.

New Fraud Rules

The UK’s Payment Systems Regulator is introducing new fraud rules this October, which will force payment firms to reimburse victims of authorized push payment fraud up to £415,000.

  • Companies have expressed concerns about the reimbursement requirements, saying they could limit development and innovation.
  • Jonathan Frost of Vox Veritas Vita Consulting calls it a “chicken and egg situation.”

Conclusion

As Sweden continues its transition to a cashless society, experts urge caution and vigilance to ensure that vulnerable individuals are protected from fraud and exploitation. It is essential to strike a balance between the benefits of a cashless society and the need to protect those who may be most affected by it.