Elmore and Green Swan unite to tackle APP fraud

In a significant move to address the growing threat of Authorised Push Payment (APP) fraud, Elmore Insurance Brokers and Green Swan Compliance have announced a collaborative effort to develop an APP Fraud Reimbursement Insurance solution.

This initiative aims to support UK banks, Payment Service Providers (PSPs), E-Money Institutions (EMIs), and Authorised Payments Institutions (APIs) in mitigating risks and complying with new regulations mandating the reimbursement of APP fraud victims.

APP fraud has become a major concern for financial institutions in the UK. According to UK Finance, APP fraud losses reached a staggering £459.7 million in 2023, with a 12% increase in the number of cases. This type of fraud occurs when individuals are tricked into making real-time payments to fraudsters, often resulting in significant financial losses. The UK’s Payment Systems Regulator is set to implement new rules in October 2024, requiring PSPs to reimburse victims of APP fraud within five business days, unless gross negligence can be proven.

To help financial institutions navigate these new regulations and protect their balance sheets, Elmore and Green Swan have developed an innovative insurance product. This APP Fraud Reimbursement Insurance is designed to cover the financial impact of reimbursing fraud victims, providing a safety net for institutions processing Faster Payments.

Simon Gilbert, CEO of Elmore, emphasised the importance of this solution, stating, “APP fraud occurs when people are manipulated into making real-time payments to fraudsters. It has quickly become one of the most significant types of fraud on UK Faster Payments, which is a service that allows UK sterling payments to be made electronically between banks instantly or within two hours.”

The new reimbursement regulations present a potential minefield for UK financial institutions, particularly small to medium-sized firms that may struggle to bear the financial burden of fraud reimbursements.

“All Financial Institutions that have an APP exposure are going to need to look at the insurance option for mitigating this new risk. There are unintended consequences from the APP reimbursement regulations that have serious implications for many firms. The EMI industry, and especially those with Agents and Distributors, all face new issues under the new APP fraud rules,” said Leven Li, Co-Founder of Green Swan.

The application and supervision process will be supported by Green Swan’s digital compliance services.

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