‘War on scams’: Australian banks to name-check money transfers

Australian banks will block customers from transferring money if there is a name listed by the sender that does not match the details of the recipient, as part of a major crackdown on scams.

The financial institutions have responded to growing calls, including from the Australian Competition and Consumer Commission (ACCC), to name-check transactions and issue notifications.

Australian Banking Association chief executive Anna Bligh declared a new offensive in the war on scams. Credit: Natalie Boog

The Australian Banking Association (ABA) and Customer Owned Banking Association (COBA) declared the sector was unveiling a “new offensive in the war on scams”, which the ACCC revealed cost Australians $3.1 billion a year – and rising.

“[The initiative] reflects the banking sector’s unwavering commitment to safeguarding every Australian,” association chief executive Anna Bligh said. “It outlines the actions every bank will take to protect Australian consumers and small businesses and to harden the system against scams.”

Banks had initially resisted calls to follow in the steps of the United Kingdom, which introduced new rules in 2020 to force banks to name-check transactions and issue notifications if there is a mismatch.

But the sector has caved to growing pressure, and on Friday announced it would roll out Scam-Safe Accord across all banks, as well as mutual banks, credit unions and building societies. At the heart of the accord is a $100 million investment in a new ‘confirmation of payee system’ to ensure senders can ascertain they are transferring money to the person they intend to.

Design of the new system will immediately begin, but it will be rolled out over the next year and in 2025.

“Preventing scammers from taking the hard-earned money of everyday Australians is a shared responsibility,” COBA chief executive Mike Lawrence said. “As scammers work hard to devise new ways to steal money, it’s critical that governments, industry and consumers remain vigilant to make Australia a hard target for scammers.”

Major banks have been pouring significant resources into fraud detection and prevention, but in announcing the Scam-Safe Accord, the Australian Banking Association has put telecommunications and social media companies on notice to step up.

The Australian Financial Crimes Exchange, the central coordinator of intelligence for the investigation and prevention of financial and cybercrime, will release a report on Friday showing 30 per cent of scams had originated through telcos and 19 per cent through social media.

“Banks play a key role but are only one part of the solution,” the association said in a statement. “The ABA and COBA [Customer Owned Banking Association] look forward to seeing details from other sectors about their plans to proactively address scams.”

Releasing the latest Targeting Scams report earlier this year, ACCC deputy chair Catriona Lowe said there needed to be a three-pronged approach to tackling scams by disrupting scammers from being able to call, message or email potential victims; support consumers with information to spot scams; and prevent funds being transferred to fraudsters.

As part of the Scam-Safe Accord, banks have also committed to putting in extra measures to protect customers who are transferring money to someone they haven’t paid before; joining the Australian Financial Crimes Exchange to share scams intelligence across the banks; and limiting the payments to high-risk channels, including some cryptocurrency platforms.

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