Sweden Faces Urgent Need for Tougher Measures Against Rising Financial Institution Fraud

Sweden’s banking industry is sounding the alarm over a sharp increase in financial institution fraud, with the Swedish Bankers Association calling for enhanced transaction monitoring and enforced caps or delays on payments to combat the growing threat.

A Growing Concern: Financial Institution Fraud on the Rise

According to the National Council for Crime Prevention, fraud experienced its largest increase in 2023, with card fraud cases rising by 44 percent from the previous year. The industry group has proposed a range of measures to prevent fraudsters from exploiting personal data and using it to target victims.

Recommended Measures

The Swedish Bankers Association recommends:

• Continued enhancement of transaction monitoring systems and product offerings
• Restrictions on criminals’ use of banks’ products
• Payment service providers should be able to block the use of mobile payment system Swish and digital identity service BankID by fraudsters and money mules more effectively

International Best Practices

The UK government has already taken steps in this direction, publishing draft legislation that would permit payment service providers to delay outbound payments processing when there are reasonable grounds to suspect fraud or dishonesty. This approach has been praised as a means of reducing fraud, and several national governments across Europe have strengthened their rules on payment services.

Swedish Government’s Response

In Sweden, the government has tasked the country’s Financial Supervisory Authority with reviewing how payment service providers work to prevent fraud, in order to increase consumer protection. The Ministry of Finance has also released a memorandum on online payments fraud, which proposed requiring payment service providers and consumer credit institutions to apply strong customer authentication when a consumer uses a payment method that involves a deferred payment.

Balancing Transparency and Privacy

However, the Swedish Bankers’ Association has also highlighted the downside of Sweden’s tradition of transparency, warning that criminals are exploiting personal data provided by various search services on their websites. These bad actors operate under voluntary release certificates, which grant them constitutional protection under the Freedom of Expression Act, allowing them to publish personal data without individuals’ consent and even charge for it.

The association has called on the government to take immediate action to update data protection legislation, citing the need for greater transparency and regulation of search services. They have also urged swift amendments to limit criminals’ access to personal data via private search services and advocate for a balance between privacy rights and legitimate access to personal data by authorities and employers.

A Call to Action

The fight against organised crime requires concerted efforts from all sectors of society, the signatories stress, and they have called on politicians, authorities, payment service providers, and other private entities to collaborate to strengthen societal resilience and adapt legislation to address emerging threats effectively. As long as vulnerabilities in data privacy persist, meaningful progress in combating organised crime will remain elusive.