So what does the above chart tell us about UK banks and why is it so important?
To keep it really simple, the longer the blue/orange bar is above, the worse that bank is at dealing with scams and money laundering.
Are we all clear? Longer Bar = bad. Shorter Bar = good.
The blue bar above shows you how much scam money left the bank as a proportion of the total payments which that bank sent.
The orange bar shows you how much scam money the bank received as a proportion of the total money which was sent to it.
It's a sort of fraud and money laundering league table, but one that you don't want to be at the top of.
And what the chart above is clearly telling us is that Revolut appear to be receiving more than their fair share of APP Fraud payments. This is worrying for a firm that has designs on becoming a bank. The growing e-money industry, of which Revolut is a part, appear to be a growing destination for laundered funds, as the high street banks begin to beef up their scam controls.
Scams, or to give them their industry name, Authorised Push Payment (APP) frauds, led to 207,000 UK victims to sending £485million to criminals in 2022 - the same period covered by the above chart. If you suffer fraud on your bank account, it's the money lost to a scam that you're leat likely to get back.
Given that you're now more likely to be a victim of fraud than any other crime in the UK, it's worth knowing which banks have got your back, and which banks haven't.
If you happen to bank with TSB, you can rest easy because they promise to refund you if you're scammed (98% of the time, at least). Whilst this is perhaps admirable - being the bank that refunds everyone doesn't get you off the hook, particularly when you're supposed to be running a bank with skill and care, as the regulations require. Whilst TSB might agree to refund your losses if you are unlucky enough to fall for a scam, there is clearly work TSB needs to do so that stolen funds don't leave the bank in the first place.
TSB customer or not, you may be thinking "it wouldn't happen to me because anyone who falls for a scam is an idiot. And I am not an idiot". If that's the case, I'll let you into a secret - I used to think all scam victims were idiots too. But not anymore. Not for a very long time. I've been working on scams of one form or another for over thirty years, so if anyone is qualified to tell you that you're wrong, I guess it's me.
So, let me be really clear: scam victims are not idiots. And those who do fall for some of the more "idiotic" scams are usually vulnerable in some way.
By the way, research by VISA has shown that those who consider themselves most scam-proof are more likely to click on a scam email. Overconfidence precedes carelessness, as they say.
The armchair enthusiast might try to tell you that all scams could be prevented if the police arrested the person (aka the "mule") whose account the stolen money was paid into. Afterall, the bank that received the scam funds will have done "Know Your Customer" (KYC) checks on their account holder, won't they?. Hey presto! All scams will be solved because we know who got the money.
Except, they won't be.
It's a nice idea, but anyone who thinks going after the mules will solve APP fraud is labouring under the false impression that banks have a foolproof system to confirm an identity when an account is opened. Or that banks actively check that an existing customer hasn't just one day woken up and decided to launder money (innocently, or otherwise), or maybe has simply sold their bank account to someone else.
We can't lay blame totally at the doors of the banks here - all of them will tell you they are opening accounts "in accordance with their regulatory obligations". The problem with this is, as known by every self-respecting bank fraud manager ever, the regulatory requirements for KYC are weak. When a bank strategy is centred on building market share, it can turn into a race to the bottom as far as KYC standards are concerned.
So, whilst going after mules may not be the silver bullet solution it might first appear, it does need to happen. It will lead us to the perpetrators of some scams and it would absolutely expose the absolute shambles of an "ID system" that we have in the UK, and perhaps finally prompt a more informed debate about the upsides of a National ID card and how to implement it.
I once spoke to a rather tired looking detective who'd interviewed over two hundred mules, travelling the length and breadth of the UK in his dogged attempt to track down £1.2million that a charity had been duped into sending to a scammer. Straying out of his own force area seemed a bit of a big deal for the detective and this is unlikely to happen in lower value case unless there are structural changes within the Police.
By the time the hard working detective had completed his extensive tour of the UK the culprit and the cash was long gone - he'd returned home to Pakistan. I never did hear if the scammer came back to the UK but I hope that he found himself arrested when he passed through UK immigration. With £1.2m in his pocket, I suppose he might have tried a different country next time, with a new identity of course.
According to the Home Office, only 0.8% of police resources are dedicated to fraud in England and Wales.
On Mules: we don't have an "FBI style" police force and we don't have a national ID card, although both could help in the fight against mules.
If every bank in the table above equalled NatWest's performance, then APP Fraud could be cut by about at least £200m per year (OK, so that's a total guess but bet I'm probably not far off). Would anyone disagree that denying this level of cash to organised criminals would be a good thing? Well done NatWest.
I think it may be a while before we see Revolut heading down the chart, but for a firm described by Jeremy Hunt as a "shining example" of the kind of fintech company we want in the UK, they certainly don't lack the resources.
My tip for Revolut? If you want to get a banking license then a greater focus on mules and the prevention and support of APP victims will significantly improve your chances.
Jason
Jason Costain is a freelance fraud consultant. He spent more than two decades working in banking fraud prevention and anti money laundering.
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