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New Zealand’s parliamentary committee has urged banks and financial institutes to bolster their security system and recommend a voluntary compensation scheme to investigate banking scams.
Parliament’s Finance and Expenditure Committee is putting pressure on New Zealand’s banking system to design more secure frameworks. The committee makes three recommendations to protect consumers and banking from proliferating financial systems. These recommendations aim to positively impact the customer and enhance the integrity of the financial ecosystem. The committee acknowledges that New Zealand has protections to protect banks from scammers, but criminals constantly access loopholes and attack New Zealanders. New Zealand needs measures like the United Kingdom, such as real-time transaction monitoring by checking names and account numbers or confirmation of payee.
They also mentioned a UK bank, Lloyds Banking Group, which observed that confirmation of payees assisted them in reducing 31% of transfer money scams after some months of its implementation in 2020. The committee also explained that banks should compare the name provided by the person to the actual name connected with the account they are funding. An alert will be sent to the user if the names don’t match or in case of insufficient data for the beneficiary account. “This will allow the banks to make an accurate decision whether to proceed with the payments.”
New Zealand banks also mentioned that they are working with the industry “and other relevant parties on this along with other anti-scam initiatives that could help protect New Zealanders from the increasing frequency and sophistication of scam and fraud attempts.”
These recommendations prevent money laundering and create an extra layer of protection in the banking money transfer system. Janine Starks, a personal finance commentator, has said due to banks’ failure to implement checks regarding names and account numbers, New Zealanders are more prone to fraud. The committee also urged New Zealand Banking Association (NZBA) to update the security framework and enhance banking practice to “offer further measures that help protect consumers from scams and fraudulent activity”.