Delays in implementing a shared fraud database is inhibiting actions against financial fraud and scams, banks have warned.
The Banking & Payments Federation Ireland (BPFI), the industry group representing Ireland’s banks, wrote to the Department of Justice in December for an update on the timeline for implementing the database.
The shared fraud database, proposed by the banks, is intended for banks to share real-time information on fraud cases and other criminal activity with authorities and other banks.
Uncertainty over the implementation of a shared fraud database is a “critical blocker” in tackling financial crimes, the organisation said.
The proposed database has been in the works for years but requires regulatory changes to facilitate its use given the sensitive data at play.
A spokesperson for the Department of Justice said the regulations would be made under the Data Protection Act 2018.
“Work is under way in the department with the aim of bringing the matter to completion later this year, subject to the outcome of the further stakeholder consultations that are necessary to inform the drafting of the regulations,” he said.
In its letter to the Department of Justice, the BPFI said there had been an increase in fraud levels in recent years.
“[The] development of the shared fraud database remains part of a critical suite of initiatives needed to assist in the fight against the relentlessly increasing fraud levels we are witnessing in Ireland,” BPFI chief executive Brian Hayes wrote in the letter.
“The uncertainty relating to the timeline for legislation is a critical blocker for the development of such a key piece of infrastructure for Irish consumer [sic] and for the banking sector.”
According to figures from BPFI released this week, victims of online and mobile banking fraud lost €8.6 million in the first half of 2023. The figures mark a 26 per cent increase year on year.
BPFI raised its concerns with the department over so-called mule accounts used for moving illicit money around. Mule accounts typically involve a person holding money linked to crime in their account before moving it another account. Money mules could face charges of money laundering,
Last year, the Garda National Economic Crime Bureau warned that children as young as 14 were being dragged into money mule operations, often recruited through social media.
BPFI also warned of increasing levels of text message scams that seek to dupe people out of money.
“The shared fraud database is a key prevention tool to disrupt these trends,” Mr Hayes said.
The spokesperson for the department added that the Government planned to implement the recommendations of the Hamilton Review into Economic Crime, which was published in 2022 and sets out actions to enhance enforcement and the prevention of economic crime.
To date some of these measures include the enacting of the Criminal Procedure Bill and the Competition (Amendment) Act, which was signed into law in June 2022.
In the UK, a similar fraud sharing database called Cifas is in operation. It is run as a not-for-profit organisation and counts AIB and Bank of Ireland’s UK businesses as members. According to Cifas, its database helps prevent £1 billion (€1.17 billion) in fraud every year.
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