For UK residents, the way they send money is going to change as part of new anti-fraud safety measures. The new scheme is in an effort to combat fraud that costs the UK more than £130 billion per year and to protect consumers from fraudsters from duping people into sending money to the scam accounts.
Starting 30 June 2020, six biggest UK banks; Halifax, First Direct, RBS, NatWest, Nationwide, and Santander will have the new system in place. Other players like TSB said they will also follow suit and implement the new system by October 2020.
What are the main changes?
Name verifications: Senders will be able to ask banks to conduct a name check before you send out any money.
Banks will verify if the name on an account matches the name of the person you are sending money to. In case the bank is unable to verify, you will be notified before any money is transferred, and you can stop the payment.
However, the new system will only work if both banks you are dealing with are registered.
Confirmation of Payee: The new system for bank transfers, known as “confirmation of payee” was first introduced in October 2018 and will become law in the UK on 30 June.
Currently, banks do not have to verify the details of the recipient’s information. This is a loophole that scammers have been taking advantage of. For example, one can pose a prince and dupe vulnerable people into sending money to a fake account. The new rule will combat address this loophole.
In addition to the 6 aforementioned banks, Barclays, HSBC, and Lloyds Bank are among the banks that will start conducting name-checks when money is being sent to third party accounts.
CHAPS: The new rules will also apply to faster payments like the Clearing House Automated Payment System (CHAPS) is a real-time gross settlement payment system used for GBP transactions in the UK.
It is important to note that the new rule is not applicable to international money transfers. Here are 6 tips to protect yourself from an international money transfer scams. We have seen a rise in financial frauds and scams during this pandemic. From magic potions, remedy cures, to love scams. Here are some tips to protect yourself from a financial scam. The golden rule of thumb is that if it is too good to be true, it is a scam.