Hong Kong authorities and major banks have formed an alliance aimed at tackling scams – a growing problem globally.
The establishment of the Anti-Deception Alliance ‘signifies the shared vision and unwavering commitment’ of the Hong Kong Police Force (HKPF), Hong Kong Monetary Authority (HKMA) and banking industry to ‘combat deception, safeguard the financial interests of Hong Kong citizens and uphold the reputation of Hong Kong as an international financial hub’, according to an HKPF announcement.
The joint-platform’s creation is among the initiatives to result from a meeting seven months ago between the HKPF, HKMA and banks focused on stepping up efforts to reverse the ‘escalating trend’ of fraud. It will complement existing structures, such as a Fraud and Money Laundering Intelligence Taskforce (FMLIT) established by the HKPF, supported by the HKMA, in 2017, with 23 retail banks currently participating.
The new Anti-Deception Alliance will see representatives from 10 major banks will be assigned to work with officers from the HKPF’s pre-existing Anti-Deception Coordination Centre (ADCC) to provide ‘real-time assistance’ in tackling fraudulent activities. The ADCC was set up under the HKPF’s Commercial Crime Bureau – which investigates ‘complex’ commercial fraud, computer-related crime, counterfeiting or forgery of currency, as well as other crimes –almost six-and-a-half years ago.
‘By implementing an instant, direct and effective communication mechanism between the HKPF and the banks, the Anti-Deception Alliance is dedicated to enhancing the capabilities and efficacy of both parties in the relentless fight against deception,’ the HKPF stated as it inaugurated the alliance on 24 November.
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Boosting ‘strategic intelligence exchange’
The Anti-Deception Alliance’s objectives include strengthening ‘co-operation and co-ordination’ between the HKPF and banks to ‘promptly and proactively’ identify and alert potential victims of deception in an effort to ‘intervene ongoing deception cases at the earliest stage and prevent victims from suffering further financial losses’.
Those involved are also committed to boosting ‘strategic intelligence exchange’ between the HKPF and the banks to ‘more effectively identify emerging fraudulent activities and their associated risks in order to facilitate the formulation and implementation of corresponding counter-measures to mitigate such risks’.
A further aim is to ‘provide an interactive platform for the participating banks to facilitate the sharing of best practices in anti-deception strategies to establish a safer and more reliable financial environment.’
Since the Anti-Deception Coordination Centre’s establishment in July 2017, 864 deception cases identified by bank staff have been ‘successfully intervened’, 700 fraudsters arrested and illicit funds worth more than HK$12.3 billion (about £1.25bn/US$1.57bn) intercepted ‘as a result of close collaboration with the banking industry,’ according to the police force’s announcement (the stats are up to 31 October this year).
Since May this year, the HKPF and the banking industry have also been jointly implementing what they refer to as ‘upstream scam intervention’. By analysing ‘suspicious’ bank accounts and identifying potential victims of deception, potential victims are ‘promptly contacted’ via phone, text messages or the deployment of police officers to provide them with ‘anti-deception advice’. The authorities say that 320 deception cases have already been ‘successfully intervened’ (up to 31 October).
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Tooling up in the fight
An inauguration ceremony for the Anti-Deception Alliance was held on 24 November featuring police commissioner Raymond Siu Chak-yee, HKMA executive director (enforcement and anti-money laundering – AML) Carmen Chu, Hong Kong Association of Banks (HKAB) acting chairman Stephen Chan and representatives of the 10 participating banks.
HKMA chief executive Eddie Yue described the alliance’s launch as “another important milestone for public-private partnerships in combating fraud and financial crime”, saying that “rapid and effective communication and intelligence-sharing will assist the banking industry to detect and prevent fraud risk and related mule account networks, as well as helping intercept fraudulent payments more effectively.” Mule accounts are those used knowingly (or, in certain cases, unknowingly) to help criminals launder money.
It is just over five months since the HKMA, HKPF and HKAB announced the launch of a ‘Financial Intelligence Evaluation Sharing Tool’ (‘FINEST’), a bank-to-bank information sharing platform. The HKAB-developed initiative – which is being rolled out in stages – was described at is June launch as a ‘cyber-secured platform to speed up bank-to-bank sharing.’
The HKPF and HKMA met retail banks on 21 April to discuss anti-deception efforts, with a focus on the increased threats from digital fraud. Agreed next steps included encouraging more banks to adopt data analytics through AML Regtech Lab (‘AMLab’), a collaborative initiative among banks, technology firms and experts for sharing operational and hands-on experience of RegTech (regulatory technology) approaches. The fourth AMLab was held in June.
The HKMA has also kicked off an AML SupTech (supervisory tech) pilot on mule account network analytics, ‘testing the use of multi-bank data and technology to help further manage the risks of mule account networks at the systemic level’; and, in the past week, announced the launch of what it refers to as a ‘Faster Payment System (FPS) Suspicious Proxy ID Alert’, which will see those making payments alerted to a high risk of fraud if their payee’s FPS proxy ID (for example, a mobile-phone number) falls within a list of proxy IDs labelled as ‘high risk’ on Scameter, an HKPF-operated ‘anti-fraud search engine’ that allows the public to search various data (including bank account numbers and phone numbers) and provides a coloured risk-rated response.
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