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You may be surprised at how difficult the regulators make life for the banks. Read this case-study from the UK. https://www.financial-ombudsman.org.uk/decision

You may be surprised at how difficult the regulators make life for the banks. Read this case-study from the UK. https://www.financial-ombudsman.org.uk/decisions-case-studies/case-studies/consumer-contacts-us-complain-cryptocurrency-investment-scam https://www.financial-ombudsman.org.uk/decisions-case-studie... "We thought the spending on Marta’s account was very unusual for her and – after the first few payments – the pattern of transfers from her account should have caused the bank some concern meaning that it ought to have intervened. We thought that if the bank had asked Marta about the transactions she would have told it what she was doing." Consider the implications of this. It gets worse, "In deciding fair compensation, we also considered if would be fair for Marta to bear any additional responsibility for what happened. However, as we thought the trading platform and correspondence with the fraudsters was very convincing, we decided against that on the facts of this case. So we asked the bank to refund all the transactions which took place after the point we thought it should have intervened." This regulator does not respect the concept of personal responsibility. These problems are also downstream of systematic public policy failure. We have had telephones for about a century. Yet in 2023, it is still routine for pensioners to receive calls from organised fraudsters. There is no reliable way to trace the source of these calls, to block ranges of numbers, to prevent scam call centres, to issue pensioner-friendly forms of telephone with higher safeguards. These problems are not technically difficult to solve. All could be fixed if the telcos behaved responsibly. That work should have been done thirty or more years ago. Since that work was not done, there is now a fraud crisis. In response, regulators have forced controls to the last point possible, which is with the banks. Huge inefficiencies follow.

nvm0n2 3y ago
Ouch. Marta literally answers a get-rich-quick ad, then installs a program that lets a fraudster remotely control her computer to send money to a bitcoin exchange account that was opened in her own name (requiring her own ID documents to do so), and then send the bitcoins onwards the "investing" platform. > The CRM Code did not cover this type of transaction, because the payments Marta made from her bank account were sent to an account held in her own name with the crypto exchange. However, outside of the CRM Code, banks have other fraud prevention obligations – including to look out for unusual transactions. In other words although there's a document saying what a bank should try to do, that is actually meaningless because the regulator believes banks should somehow stop all fraud even in cases where people are literally giving random strangers total control over their bank account, deliberately, because they can't be bothered understanding how to operate their own financial accounts. The cherry on top: > If you invest in a firm which isn’t authorised by the FCA, you risk losing your money, without any protection. Apparently not, because if some civil servant thinks you are pitiable and the scam was convincing, they'll force the bank (i.e. other customers) to make you whole again anyway.
xeckr 3y ago
Interesting, thanks for sharing. This situation creates a market for new fraud-detection products, if anything just so that the banks can tell the regulator that they did their due diligence. Of course it depends on how common situations like Marta's are, and how expensive they are for the banks.
- nvm0n2 3y ago
  They have those, lots of them. It doesn't matter if the regulator will take a stance like "we think (with the benefit of hindsight) it looked suspicious, so pay up". And unfortunately this is a very common thing for regulators to do. A lot of money laundering fines against big banks are like this. A civil servant comes in five years later after being handed some evidence that some transactions were criminal, says the bank should have known (without explaining how) and levies huge fines or gets a huge settlement.

nvm0n2 3y ago

Ouch. Marta literally answers a get-rich-quick ad, then installs a program that lets a fraudster remotely control her computer to send money to a bitcoin exchange account that was opened in her own name (requiring her own ID documents to do so), and then send the bitcoins onwards the "investing" platform. > The CRM Code did not cover this type of transaction, because the payments Marta made from her bank account were sent to an account held in her own name with the crypto exchange. However, outside of the CRM Code, banks have other fraud prevention obligations – including to look out for unusual transactions. In other words although there's a document saying what a bank should try to do, that is actually meaningless because the regulator believes banks should somehow stop all fraud even in cases where people are literally giving random strangers total control over their bank account, deliberately, because they can't be bothered understanding how to operate their own financial accounts. The cherry on top: > If you invest in a firm which isn’t authorised by the FCA, you risk losing your money, without any protection. Apparently not, because if some civil servant thinks you are pitiable and the scam was convincing, they'll force the bank (i.e. other customers) to make you whole again anyway.

xeckr 3y ago

Interesting, thanks for sharing. This situation creates a market for new fraud-detection products, if anything just so that the banks can tell the regulator that they did their due diligence. Of course it depends on how common situations like Marta's are, and how expensive they are for the banks.

nvm0n2 3y ago
They have those, lots of them. It doesn't matter if the regulator will take a stance like "we think (with the benefit of hindsight) it looked suspicious, so pay up". And unfortunately this is a very common thing for regulators to do. A lot of money laundering fines against big banks are like this. A civil servant comes in five years later after being handed some evidence that some transactions were criminal, says the bank should have known (without explaining how) and levies huge fines or gets a huge settlement.