Europe Regtech Trending

Payment Systems Regulator New Proposal Gives APP Fraud Victims a Chance at Recovering Funds

Salv, the regtech company founded by Wise and Skype employees to combat financial crime, notes the Payment Systems Regulator’s (PSR) proposal to make it mandatory for banks to fully reimburse authorised push payment (APP) fraud victims.

Salv commends the move by the PSR, which is expected to incentivise banks to focus more on protecting consumers against fraud.

The regtech knows that it is possible to establish proper control mechanisms against APP fraud: the company’s proprietary collaborative crime-fighting network and platform, Bridge, built in close collaboration with banks and regulators, has been proven to be effective against APP fraud, sanctions, and money laundering.

The APP fraud, where fraudsters use social engineering attacks involving impersonation to trick consumers or businesses into transferring money to their accounts, is climbing rapidly in the United Kingdom. In 2021 the cases increased by 39 per cent, with losses passing £583million, compared with £420.7million the year before. Instant payments were used in 97 per cent of the transactions, making recovering the funds much more complicated, if not impossible.

In response to the climbing numbers, PSR encourages financial institutions to continue to develop their fraud detection and prevention infrastructure, including ’supporting and encouraging improved intelligence sharing to spot fraudulent transactions and stop them from happening.’

This is because the criminal networks behind APP fraud are becoming increasingly sophisticated and often work together internationally whilst financial institutions continue to operate in silos. The banks continue to use legacy systems not built to tackle APP fraud, and the systems lack the functionality to securely enable collaboration.

Salv’s Bridge network 

Salv’s Bridge, the cross-border inter-institution communication platform, has been proven to be effective against APP fraud. The double encrypted web-based tool enables the creation of collaborative crime-fighting networks. Bridge works by helping banks exchange and enrich data on bad actors with other financial institutions in their ’network’ and helps to reclaim fraudulent proceeds from other institutions, thereby helping to stop over 50 per cent of the fraud cases.

The Bridge was launched two years ago in Estonia, and has now expanded to the UK and two other countries. The platform was developed in close collaboration with local regulators and is fully GDPR compliant. Salv’s Bridge can legally, securely, and efficiently facilitate the cooperation between financial institutions across borders and legal jurisdictions so that transnational criminal networks can be tackled more effectively.

The benefits are tangible, as banks are solving cases 100 times faster than before – most urgent fraud cases are resolved in just minutes, compared to the previous 24 to 72 hours – and speed is key when issuing fraud recalls. The volume of communication within the networks is ten times higher than predicted by the banks’ initial internal projections.

Andres Kitter, deputy CEO of LHV UK, a banking services provider to over 200 fintech companies, said: “LHV Bank in Estonia took part in the Bridge pilot and saw excellent results in a very short period. Bridge has been particularly useful in fraud prevention, including the rising fraud cases and Authorised Push Payments fraud.

“Now we are using the tool in the UK, where we process millions of payments for our global fintech clients daily. When dealing with these cases, speed is the key aspect. The platform opens a direct line to other institutions, helping us communicate and find the necessary information to stop these actions from completing.”

Taavi Tamkivi, CEO and co-founder of Salv, said: “The cost-of-living scams are particularly prevalent at the moment, with scammers preying on consumers’ fears over spiralling prices. To stop APP fraud, we need to make it too expensive for criminal networks even to attempt it. Today Salv’s Bridge covers 99 per cent of the Estonian market and has expanded internationally, with four new networks in Europe.

“Currently, around 50 per cent of the cases are effectively stopped by banks using Bridge. This number will increase when more institutions join or establish individual collaborative networks and improve the automation of their internal anti-fraud systems. We already include companies outside the traditional financial space, and as much of the APP fraud is instigated through text messages, we’re looking to have telecommunications companies in the network.“

Call for change 

Many players across the industry have indicated the need for change. In addition to PSR, the Financial Conduct Authority, the trade association UK Finance, and the Future of Financial Intelligence Sharing programme have called for greater collaboration. Recently, the Financial Action Task Force highlighted Salv’s Bridge network in its ground-breaking report on data protection and collaborative crime-fighting as a promising case study.

Furthermore, UK’s Economic Crime Bill 2.0 suggests reforming Companies House to verify the information submitted and “enable businesses in the financial sector to share information more effectively to prevent and detect economic crime.”


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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