Hong Kong Banks Get Boost from New Fraud Detection Tool

The Hong Kong Monetary Authority (HKMA) has launched a powerful tool to combat fraud in the banking sector. The Scameter, a search engine tool, allows consumers and banks to screen payees for connections to fraud cases prior to making a transaction.

The Problem: Rapid Increase in Fraud Cases

According to the HKMA, there was a “rapid increase” in fraud cases in Hong Kong last year due to the increased availability of online financial services and a surge in their use during the pandemic. In the first half of 2022, fraud cases increased by 42 percent compared with a year ago, causing losses of about HK$2.1 billion.

Introducing the Scameter

The Scameter checks inputs against Hong Kong Police Force (HKPF) databases containing information on identifiers that have been previously linked to scams. Bank staff and stored-value facilities can use the tool to inform their own anti-fraud policies, processes, and decision-making.

Benefits of the Scameter

Allows consumers and banks to screen payees for connections to fraud cases prior to making a transaction
Strengthens anti-fraud policies and processes in the banking sector
Enhances ability to identify high-risk activity quickly

Partnerships Key to Tackling Fraud

Arthur Yuen, deputy chief executive of the HKMA, said that partnerships between banks, the central bank, commercial banks, the Hong Kong police, and the public are crucial in tackling fraud. He added that intelligence sharing has helped identify more than 19,000 previously unknown mule accounts, leading to further action from law enforcement.

The launch of the Scameter is part of a wider campaign by the HKMA to improve intelligence sharing between the central bank, commercial banks, the Hong Kong police, and the public when it comes to fraud. As part of this effort, the HKMA has also worked with the Hong Kong Association of Banks (HKAB) to update its practical guidance on fraud prevention and money laundering in a frequently asked questions (FAQs) format.

AML Regtech Lab Series

The AML Regtech Lab (AMLab) series was launched by the HKMA last year to help banks explore and adopt regtech solutions that can enhance their anti-money laundering/counter-terrorism financing (AML/CTF) activities. The aim of the AMLab series is to provide a collaborative platform for continuing peer-group sharing of operational, hands-on experience of regtech approaches.

Initiatives in the AML Lab Series

Focused on network analytics, a technology that has shown potential to help address the problem of fraud mule accounts
Strengthened the “gatekeeper” role of banks and encouraged the wider use of data and technology to improve the efficiency and effectiveness of AML/CTF controls