According to research by the Financial Conduct Authority (FCA), UK banks have also turned away 375,000 existing customers because of these concerns, and ended 800 introducer relationships.
This was the first industry-wide report on the financial crime risks in the sector, which included submissions from 2,000 domestic and foreign banks operating in the UK.
These banks also identified 120,000 “politically exposed persons” among their customers. These are people with public jobs who may be in a position to abuse their role for private gain, the FCA explained.
Moreover, staff and automated systems escalated 923,000 suspicious cases internally, with 363,000 of them being reported to the National Crime Agency. Over 2,100 terrorism-related suspicious activity reports were made to the authorities.
Megan Butler, the watchdog’s head of supervision, told the Financial Times, “The important thing for us is [that] every single one of those [terminated customers], should have been done right and done in a targeted, individual basis. It should not be a sweeping, glib characterisation of a group of people.”
The banks contacted in the report named identity fraud and theft and phishing as the most prevalent frauds that the FCA should be aware of. Computer hacking, malware-enabled fraud and credit card fraud were also highly cited.
The jurisdictions assessed by the banks and considered to have the highest financial crime risk are Iran, Panama, Russia, Iraq and Laos, respectively. The US, Sweden, Norway, Germany, and France held the least risk, respectively.
Moreover, the report found the fraud types for which customers were most often identified as the victim were pension liberation fraud, account takeover, and debit card fraud. Financial institutions felt to be more often the victim of expenses fraud, loan repayment fraud, and mortgage fraud.