Banking fraud
leapt into action. After asking Dighton some questions about these unusual transactions, she initiated the ‘Banking Protocol’, a nationwide policy to catch in-branch fraud and protect members of the public. The police soon appeared and the truth emerged. Though Dighton’s home was indeed in disrepair, especially following the death of his wife, it transpired that the Cricklewood man had been bullied into paying eye-watering fees by a contractor. Since Dighton’s brush with North London’s criminal underworld – happily, the dodgy builder was quickly detained – the Banking Protocol has gone from strength to strength. “The scheme has prevented £174m of fraud since it was introduced in 2016, with nearly 1,000 criminals arrested,” says Christine Farrow, a fraud prevention expert at UK Finance and the Banking Protocol’s mastermind. Not that this good work completes itself. As Ann-Marie O’Donnell’s quick thinking implies, the Banking Protocol can only succeed when banks, police forces and customers work together, with training and collaboration as vital as locking the vault door every Saturday night.
And, despite its victories, even the Banking Protocol is now being forced to change. With 736 UK bank branches closing their doors in 2021, criminals are increasingly swapping in-person fraud for digital alternatives. That is encouraging shifts in how the Protocol is conceived – with consequences for banks and consumers alike. Nor, of course, is the fraudster a purely British phenomenon. As one recent report warns, 39% of all Europeans have been hit by financial scams over the past few years. Yet if banking fraud is an international problem, it also has global solutions. By liaising across borders, officials are again proving just how far cooperation can go, especially when potential victims are informed of the risks.
Catch them if you can
Fraud has been a part of banking for generations. As long ago as 1873, crooks defrauded the Bank of England of £102,217 (over £10m in today’s money) after cashing nearly 100 forged bills of exchange. A century later, Americans were bewitched by the tale of Frank Abagnale, an expert cheque forger and antihero subject of movie Catch Me If You Can. But as banks have become better at combatting forgery and identity theft – think fake bills and faker beards – criminals have adapted in kind. “Fraudsters began to target individual customers more than the banks’ systems, as the customer was identified as the new weak point for manipulation and social engineering,” says Chris Hubbard, head of fraud at Danske Bank. That is true everywhere from ‘investment scams’ (fraudsters promising their victims a payout) and ‘romance scams’ (criminals
Future Banking /
www.nsbanking.com
plucking at a mark’s heartstrings), to Dighton and his rogue trader.
Whatever the technique, business is booming. The UK’s Financial Ombudsman Service received 30% more complaints about so-called ‘authorised’ scams in mid-2021 than it did over the same period in 2020. But beyond the headline figures, do these various plots have much in common? For starters, scammers often target the vulnerable – typical are mourning widowers like Raymond Dighton. Given how much effort they put into their schemes, that is probably wise. “Scammers invest quite a lot of time in scamming somebody,” says Brian Dilley, group director of economic crime prevention at Lloyds. “It’s not just [sending] a text out and [saying] ‘can you click on this link?’”
Once a criminal has worn their victim down – whether through inducements or threats – it is time to strike. Normally, they will get a customer to visit their bank and withdraw some cash. According to Detective Sergeant Jon Cooper from the West Mercia Police Economic Crime Unit, criminals will often demand that their victims keep their mobile phone line open while at the branch, perhaps as a form of intimidation but also to check if their scheme is successful. Assuming it is, they will then have the victim deliver the cash in person. It goes without saying that the fraudster, and any promises they may have made, will then promptly disappear. It is also unsurprising that this destructive and cynical style of heist can have devastating consequences for victims – and not just financially. After being tricked into giving away tens of thousands of pounds from 2018, for instance, one elderly man was left homeless and suicidal.
To catch a thief Until fairly recently, the UK had no proper system to fight these outrages. Though Farrow says that nominal partnerships between police and banks have existed for years, she equally admits that “meaningful and effective collaboration” has long been in short supply. As Dilley explains, a basic problem was that tellers could often tell their customers were being duped – but were nonetheless powerless to help them. That changed with the introduction of the Banking Protocol. Launched in 2017, the system arms bank staff with the power to interrogate customers about potentially fraudulent transactions – and call the police if their hackles are raised.
What does all this look like in practice? Though staff are trained to spot a range of suspicious scenarios, Dilley sketches out the essentials. The first warning sign is if a customer comes in and asks to withdraw an unusually large amount of money. “If they say it’s for building work,” Dilley suggests as a hypothetical, “we’ll ask them to provide us with details.” If the bank is still unconvinced, it will invite the customer into a separate room, walking them through potential scams. If they
41 £174m
The amount of fraud the Banking Protocol has prevented since it was introduced in 2016, with nearly 1,000
criminals arrested. UK Finance
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