GENERICO.ruEconomicsVulnerabilities found in the new anti-fraud bill: what’s wrong with a trusted person

Vulnerabilities found in the new anti-fraud bill: what’s wrong with a trusted person

“The state is once again directing its efforts to fight not the root cause, but the consequence of the problem.”

The state has introduced another mechanism to protect Russians from financial fraudsters. According to the bill prepared by a group of deputies, banks will be required to coordinate money transfers of clients (primarily socially vulnerable) with their relatives in order to prevent scams. Meanwhile, the document in its current edition is infinitely far from perfect from a technical and legal point of view, although it is justified as an idea. Experts saw a lot of vulnerabilities in it.  

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In general, we are talking about a service to protect citizens' funds. Clients of systemically important credit institutions (currently there are 13 of them) will have the right to issue a power of attorney to a third party. Which, in turn, will be able to reject or confirm transactions within 12 hours of notification from the bank. As one of the authors of the initiative, First Deputy Chairman of the State Duma Committee on the Financial Market Anatoly Aksakov, noted, the number of transactions carried out either without the consent of clients or under the influence of deception is growing in the country. According to the Central Bank, in 2023 alone, fraudsters stole about 15.8 billion rubles from the accounts of Russians (11.5% more than in 2022), making 1.17 million transactions.

The measure, which in fact is not some kind of new word in banking practice, is also supported by the Bank of Russia. A few years ago, the regulator issued guidelines regarding the introduction of a “second hand” service. As the Central Bank explains, this service allows a client of a credit institution to appoint a relative or friend as his assistant. Of course, by mutual agreement. The authorized representative has the right to either confirm the transfer or reject the transaction within a certain period. At the same time, he does not have access to the financial resources of the ward.

However, it’s time to remember the saying “it was smooth on paper, but they forgot about the ravines.” According to those interviewed by MK experts, the idea itself is justified, questions arise regarding the prospects for law enforcement.  

“With good intentions, we risk creating even more problematic situations. Firstly, the measure is contrary to the law. No one has the right to control the actions of a person who is not deprived of legal capacity. If a person is declared incompetent by a court, a guardian makes decisions for him. It is not clear how to get around this conflict. Secondly, abuses by trusted persons cannot be ruled out: socially vulnerable groups of Russians, pensioners, may well turn out to be their hostages. In general, there are a lot of “buts” here, including those of a moral and ethical nature. In my opinion, it would be much more effective to connect artificial intelligence to the verification of financial transactions for certain social categories. So that he monitors and blocks atypical cases. But the best way is associated with a “cooling-off period”: this is when a person has time to think, suspect fraud and refuse to carry out the operation. Especially when the matter is clearly unclean.”

“It is still difficult to assess the positive aspects of this initiative, but a number of questions already exist. Experienced fraudsters will find many ways to deceive not only the bank client, but also a trusted representative. Sometimes entire families fell for their bait. What should a person (for example, a lonely pensioner) who has no relatives do? Who should he turn to for help? To the neighbors? But neighbors can also be deceived. To the lawyers? But here the pensioner will have to fork out money, and there is still no guarantee that the lawyer will not deceive him either. Perhaps the draft law should clearly define the circle of trusted persons. For example, only first- and second-degree relatives who do not arouse any suspicion. Ultimately, if someone calls you on the phone, you can always check where the call came from. There is another aspect to the problem. For example, even close relatives can manipulate a person – under the pretext of protection from fraudsters, prohibiting them from performing certain transactions. The bill will need to stipulate that the client has the right to refuse to coordinate his transactions with third parties that he does not want. Or, for example, allow a personal bank manager to perform this function.

“The current version of the bill does not so much solve the problem of protection against fraudulent transactions as it indicates the vector of development of regulation and the position of the state. The Central Bank has long been calling on banks to introduce a “second hand” service; with the adoption of the document, such a service will become mandatory. At the same time, the measure will only become truly effective if it is extended to all credit institutions, and not just to systemically important ones. And subject to the resolution of the issue with card transactions, transfers through SBP and cash withdrawals (where no additional approvals are required). Of course, this is an additional cost for banks: they will have to improve their remote service channels. But if implemented correctly, the losses will be compensated by reduced costs for resolving incidents related to fraud.”

“The state is once again directing its efforts to fight not the root cause, but the consequence of the problem. We need to think about how to identify and isolate these scammers, how to deprive them of the space in which they feel great, freely inventing new ways to fool people. Law enforcement agencies must have their say here. Instead, an incomprehensible legal conflict is created related to the voluntary nature of the measure: if a person is not officially recognized as legally incompetent, no one can require him to acquire some kind of additional guarantor. And if recognized, then there is nothing to talk about at all.”

“The idea of ​​a trusted person is actually not new. Similar “two-stage” mechanisms confirmations of transactions have been developed for a long time. The most effective means of fraudsters is social engineering: a person is misled by putting pressure on the “sore points” of the person. and removing you from a state of mental balance.  

Being very worried, a person (especially an elderly person) cannot always recognize deception and loses money. Accordingly, the decision to leave the “last word” behind a trusted third party, in my opinion, is very effective. Fraudsters will not be able to influence him in any way, because they will not even know who it is. And 12 hours is quite enough to confirm or reject the operation: there will be no situation when a person is woken up by a call from the bank in the middle of the night.


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