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Hong Kong Banks to Enhance Fraud Detection Methods

In an effort to combat digital fraud, the Hong Kong Monetary Authority (HKMA) has announced enhanced approaches to strengthen the banking sector’s response. According to statistics from the HKMA and the Hong Kong Police Force (HKPF), reported cases of digital fraud have increased significantly in recent months.

Improving Collaboration and Innovation

The HKMA has worked closely with 28 retail banks and other stakeholders to provide regulatory support, improve collaboration, and promote innovation. Five anti-fraud initiatives were announced by the HKMA and HKPF in April this year, aimed at improving information sharing, transaction monitoring, and customer alerts.

Information Sharing

The Fraud and Money Laundering Intelligence Task Force (FMLIT) has been delivering significant results since its inception. To further enhance efforts, banks are required to explore the inclusion of more data and network analytics in real-time fraud monitoring systems to identify high-risk accounts and networks.

Real-Time Fraud Monitoring

All 28 retail banks have implemented real-time fraud monitoring and detection capabilities, including the ability to alert customers whenever a high-risk transaction is identified. Banks are encouraged to further strengthen their efforts by applying network analytics and exploring the inclusion of more data in their systems.

Customer Alerts

The HKMA has launched an anti-fraud search engine called “Scameter”, enabling the public to check whether a transaction may be at higher risk for fraud. A pre-transaction alert mechanism will also be introduced for Faster Payment System (FPS) transactions, based on Scameter information, to alert customers where the FPS Proxy ID of the payee is listed as “High Risk”.

Implementation and Oversight

Banks are required to establish adequate systems and controls with senior management oversight to enable effective implementation of the measures and initiatives. The HKMA will collect related data from banks and review the effectiveness of their implementation.

The HKMA continues to work closely with banks and all stakeholders to enhance the ecosystem response to the evolving threat from fraud and financial crime. For further information, please contact aml@hkma.iclnet.hk.