On 20 Dec 2024, the HKMA issued guidance requiring AIs to implement a seven-point framework to combat authorized payment scams, including dynamic monitoring systems, prompt customer alerts, risk mitigation protocols, and enhanced intelligence sharing. AIs must adopt these measures by 30 June 2025 to address persistent high APS complaint volumes despite prior anti-fraud initiatives.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 20 Dec 2024, the Hong Kong Monetary Authority (HKMA) issued guidance requiring Authorized Institutions (AIs) to implement comprehensive measures to prevent, detect, and disrupt authorized payment scams (APS), following rising scam incidents and persistent high complaint volumes despite prior anti-fraud initiatives.
Comprehensive APS Framework
The guidance mandates AIs to establish a robust framework with appropriate policies, procedures, and senior management oversight, ensuring adequate resourcing including staff trained on latest scam trends and typologies published by the HKPF and HKMA.
Dynamic APS Monitoring System
AIs must implement a monitoring system capable of identifying high-risk APS indicators by integrating customer risk profiles, banking behaviour, transaction data, latest scam typologies, and external intelligence from platforms like FMLIT.
Prompt Customer Alert Handling
Upon identifying high-risk situations, AIs must promptly alert customers, confirm transaction intent, probe transaction purpose (including beneficiary relationship), and assess explanations against customer profiles before proceeding.
Risk Mitigation Measures
Where customers proceed despite alerts or cannot be contacted, AIs should seek HKPF advice, consider temporary transaction holds, and provide accessible customer support channels. AIs must also assess HKPF involvement where scams are suspected.
Intelligence Sharing and Technology Adoption
AIs are required to share suspicious account information via FINEST and FMLIT, exchange strategic insights on scam typologies, and adopt AI/network analytics to enhance detection of complex scam networks.
Anti-Deception Initiative Participation
AIs must proactively enhance performance in joint initiatives, particularly through timely handling of requests from the '24/7 Stop Payment Mechanism' and upstream scam intervention mechanisms, with HKMA reviewing performance data.
Publicity and Customer Education
AIs are expected to collaborate with HKMA and HKPF to deliver timely educational messages on emerging scam tactics, reinforcing customer responsibility for self-protection.
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