Combating Financial Fraud Across Europe: Key Strategies

A 61yearold pensioner in Vilnius gets a phone call from someone who says they work for her banks fraud department The caller already knows her balance her last three transactions and her mothers maiden name Twenty minutes later she has moved her savings in three separate transfers into an account she was told belonged to a safe holding facility Her banks fraud system never gets the chance to flag anything because from its point of view she authorised every payment herselfThat scene repeats itself thousands of times a week across the EU and UK and its why the numbers keep climbing The European Banking Authority and the European Central Bank published a joint report on payment fraud in December 2025 covering 2024 data and the total came to 42 billion euros in reported losses up from 35 billion euros the year before Credit transfer fraud the category that covers most of these authorised push payment scams made up 22 billion euros of that figure a 1637 jump Card fraud rose even faster up 2937 to 13 billion eurosNone of this is happening because banks got careless Strong customer authentication required under PSD2 since 2020 has measurably cut fraud on the transactions where it applies The trouble is that criminals stopped attacking the login step and started attacking the person behind it You cant block someone from entering their own PIN and confirming their own transfer when they genuinely believe theyre paying their landlord their tax office or their banks own security teamThis piece walks through where the losses are concentrated what regulators across Europe are actually doing about it and whats changing for the compliance and fraud teams who have to make it work in productionAuthorised Push Payment Scams Are Now the Main EventAsk any fraud analyst at a European bank what keeps them up at night and the answer isnt card skimming anymore Its a customer on the phone calm and cooperative walking through a payment theyve been coached to make by someone pretending to be a police officer a courier or their own relationship managerThe EBAECB report put a hard number on who eats the cost consumers absorbed roughly 8537 of credit transfer fraud losses in 2024 mostly through scams that manipulate people into authorising the transfer themselves rather than through account takeover That split matters because it tells you the fix isnt purely technical A perfectly secure login does nothing if the account holder is the one typing in the transfer detailsA few patterns show up again and again in casework across the blocImpersonation scams where a caller poses as a bank police officer or government agency and convinces the victim to move funds to a safe accountInvestment and crypto scams often run through fake trading platforms with slick dashboards showing fabricated returns to keep victims depositing moreInvoice and CEO fraud where a finance team receives a doctored invoice or a voice message that sounds exactly like their actual chief executive asking for an urgent supplier paymentRomance scams which tend to run for months and extract money in smaller hardertoflag incrementsRealtime payment rails make all of this worse in one specific way the money moves in seconds not days Under the old batchprocessing model a bank had a window overnight to catch something that looked off SEPA Instant Credit Transfer closes that window By the time a fraud teams rules engine flags an unusual pattern the funds have often already cleared into a mule account and been split across a dozen moreCard Fraud Hasnt Disappeared Its Just Moved OffshoreCard fraud losses climbed 2937 year on year and the EBAECB data points to a specific and fairly blunt explanation fraud rates were about 17 times higher on transactions where the payment recipient sat outside the European Economic Area where SCA isnt a legal requirementThat gap is the whole story A criminal holding stolen card details doesnt need to beat European authentication rules if they can simply route the transaction through an acquirer in a jurisdiction that never asks for a second factor Cardnotpresent fraud on crossborder ecommerce checkouts remains the easiest way to monetise a stolen card number and merchants processing through nonEEA gateways are whether they realise it or not sitting in the part of the system with the thinnest controlsCard testing bots add another layer to this Fraud rings run scripts that fire small lowvalue authorisation requests often under a euro against a list of stolen numbers just to see which ones are still live before attempting a bigger purchase Issuers that dont have velocity checks tuned for this kind of probing traffic end up handing attackers a validated card list for freePicture a merchant acquirer in a nonEEA jurisdiction processing a batch of a thousand tiny authorisation attempts from the same IP range within an hour spread across a hundred different card numbers none of them individually large enough to trip a fraud alert Thats not a hundred separate incidents Its one attack and the only way to catch it is by looking at the pattern across transactions rather than scoring each one alone which is exactly the kind of crossborder visibility a purely domestic fraud engine tends to missVerification of Payee Closes the WrongName LoopholeFor years a European bank transfer only checked one thing before moving money does this IBAN exist It never checked whether the name typed in matched the name on the account That gap is exactly what impersonation and invoice scams exploit since the victim types in a name they trust while the money actually lands in a mule account with a completely different ownerThe EUs Instant Payments Regulation closes that gap through Verification of Payee or VoP Payment service providers in the euro area had to have it live by October 9 2025 with noneuro EU member states given until July 2027 VoP checks the IBAN against the account holders name before the transfer goes through and returns one of four results a match a close or partial match no match or an unavailable status if the receiving bank cant respond in timeA close match in practice is where most of the value sits Its the warning that stops someone from sending money to J Smith when the account is actually held by J Smyth Holdings Ltd a name similarity mule networks rely on because most people dont read the fine print on a payment confirmation screen PSD3 and the accompanying Payment Services Regulation still working through the EU legislative process are expected to extend fraud liability rules further shifting more responsibility onto banks that fail to run these checks properly or ignore a clear mismatch warningSynthetic Identities and Deepfakes Are Breaking Static Onboarding ChecksA synthetic identity doesnt belong to any real person Its built from a real valid national insurance or tax ID number usually stolen or bought on a forum stitched together with a fabricated name date of birth and address Because the core identifier is genuine it passes basic database checks that only confirm a number exists The fraudster then nurtures the identity for months opening a small account using it normally building a credit history before cashing out on a much larger scaleGenerative AI has made this dramatically cheaper and faster to pull off Identity verification vendor Shufti projected in its 2026 Identity Fraud Index that deepfake identity fraud would rise nearly 49537 over 2025 levels across live video deepfakes face swaps and document forgeries with document deepfakes alone expected to jump close to 40fold A fraudster no longer needs a graphic designer to fake a passport photo page A generative model can now produce a document image and a realtime face swap can pass a liveness check that was designed years before this kind of tooling existedThis is why onboarding checks built around a single static ID scan are aging out fast Anyone tracking financial fraud trends across the sector will notice the same shift showing up in banking crypto exchanges gigeconomy platforms and online lenders at once the fraud isnt concentrated in one channel its spreading wherever onboarding still leans on a document photo and a selfie without deeper signal Layered verification active liveness challenges device and behavioural signals and crossreferencing against known fraud patterns rather than a single document check is becoming the baseline rather than a premium featureAMLAs Arrival in Frankfurt Changes Who Answers for AML FailuresThe EUs new AntiMoney Laundering Authority began operations on July 1 2025 headquartered in Frankfurt after member states competed for the seat Consiliums own announcement of the decision called AMLA the centrepiece of the reform of the EUs antimoney laundering framework and it isnt an exaggeration AMLA gets direct and indirect supervisory powers over obliged entities plus the authority to impose sanctions backed by a staff of more than 400 once fully operationalWhat changes in practice is accountability Rather than 27 national regulators each interpreting AML obligations slightly differently a subset of the highestrisk crossborder financial institutions will answer directly to a single EUlevel supervisor For a compliance officer at a bank operating across several member states that means one consistent rulebook instead of reconciling a patchwork of national guidance and it means an enforcement body with teeth rather than a coordination function with a mailing listSmaller firms shouldnt read this as something that happens to other people AMLAs technical standards and guidance will filter down through national regulators regardless of whether a given firm sits under direct supervision and the direction of travel is unmistakably toward harmonised stricter enforcement across the bloc A regional payment institution thats never dealt with a supranational regulator before will still feel the effects the first time its national authority updates a reporting template to match AMLAs formatDORA Turns IT Outages Into a Fraud and Compliance ProblemThe Digital Operational Resilience Act took effect across the EU financial sector on January 17 2025 and it reframes something that used to sit purely in the IT departments lap operational resilience is now a fraud and compliance issue not just an uptime metricDORA requires financial entities to maintain a register of every ICT thirdparty provider they rely on test their systems against realistic cyberattack scenarios and report major incidents within tight timeframes That matters for fraud prevention for a plain reason a ransomware attack or a cloud outage at a core banking provider doesnt just knock out online banking it also creates a window where fraud monitoring systems go dark or degrade exactly the moment fraud rings are quick to exploit A payment processor whose fraudscoring engine fails over to a backup with looser rules for two hours has effectively handed criminals a twohour amnestyFirms that treated cybersecurity and fraud prevention as separate budget lines are having to merge those functions or at least get them talking to each other properly because DORAs incident reporting obligations and a banks fraud loss reporting increasingly cover the same underlying eventMoney Mules Are the Supply Chain Instant Payments Fraud Runs OnNone of the scam patterns above work without somewhere for the money to land first Thats what a money mule account is a bank account often opened by a real person for a real if naive reason used to receive stolen funds and move them onward before anyone can claw them backEuropols 2025 Internet Organised Crime Threat Assessment describes a thriving underground market where stolen personal data gets bought sold and repackaged to open these accounts at scale sometimes using real identities recruited through fake job ads promising easy money for processing payments sometimes using synthetic identities built for exactly this purpose Students and people in financial difficulty are common recruitment targets often through social media ads that never mention the word muleFor a bank catching a mule account matters more than catching any single fraudulent transaction because one mule account can be the exit point for dozens of unrelated scams running in parallel This is where network analysis earns its keep an account that receives transfers from ten different unconnected customers in different cities within a week is a far stronger signal than any single transaction looked at in isolation The instant payment rails that make life easier for legitimate customers are the same rails that let a mule account cash out and close before a banks investigation team even opens the fileA lot of these accounts get opened through onboarding flows that never should have approved them in the first place a stolen identity document a rushed video selfie check a name that doesnt quite match the address on file Tightening onboarding controls at account opening does more to choke off the mule supply than any amount of afterthefact transaction monitoring because it stops the account from existing rather than trying to catch what flows through it laterWhat Actually Works Practical Strategies for Fraud and Compliance TeamsGiven all of that what does a workable defence actually look like on the ground rather than in a regulatory press releaseBehavioural biometrics and device intelligence tracking how someone types scrolls and holds their phone catch a remoteaccess scam or a coerced payment in ways that a onetime password never will because the victims own credentials are perfectly validRealtime network analysis across accounts rather than transactionbytransaction scoring is what actually catches mule accounts before they cash out and disappearLayered identity verification that combines document checks active liveness detection and ongoing monitoring closes the gap that a single onboarding scan leaves wide open for synthetic identitiesCrossinstitution data sharing on confirmed mule accounts and fraud patterns still patchy across borders is one of the highestleverage investments a national banking sector can make since a mule account flagged at one bank is frequently already active at three othersStaff and customer education aimed at the specific scripts fraudsters use right now not generic never share your PIN messaging since impersonation scams evolve their pretexts every few monthsNone of this is theoretical for the people running fraud operations inside actual banks and fintechs and its worth hearing it from them directly rather than from a summary The WTF podcast spends entire episodes with fraud leads and investigators walking through cases like these the near misses as much as the failures which tends to be more useful than another whitepaper full of averagesThe pattern across every section here is the same one fraud prevention in Europe has stopped being a problem any single institution solves alone A banks fraud controls are only as good as the payeeverification checks its counterparties run the mule accounts its peers have already flagged and the identity signals shared across a market rather than hoarded inside one companys database Regulation is pushing hard in that direction The institutions getting ahead of it arent the ones with the biggest compliance budget theyre the ones treating fraud data as something to pool rather than protectDisclaimer The information provided on the Website does not constitute investment advice financial advice trading advice or any other form of advice and you should not interpret any of the financial content as such Please conduct your own due diligence and consult with a financial advisor before making any investment decisions Midday does not endorse or promote any such activities and you access them at your own risk fully understanding the monetary and legal consequences involved Midday shall not be held responsible for any losses you may incur 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Combating Financial Fraud Across Europe: Key Strategies

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