An unexpectedly vicious wave of fraud and online crime throughout the Asia Pacific could make the future of finance look completely different – albeit surprisingly familiar. 

Regulators and governments have been discussing the epidemic of scams, crime, and deepfakes overrunning many countries and cities in the region, including the financial hubs of Hong Kong and Singapore.

As finews.asia has extensively documented, senior officials have raised the alarm in speeches, other authorities have built apps and the police have issued warnings.

Still, much of it appears to have fallen on deaf ears as residents get caught out repeatedly, given the increasing sophistication of fraudsters and the tools they use.

Payout Levels

But now, more substantive efforts are on the way. The Monetary Authority of Singapore (MAS) and the Infocomm Media Development Authority of Singapore (IMDA) announced on Thursday that they would implement a so-called Shared Responsibility Framework (SRF) in just under two months. 

According to them, it will require banks and telecommunications groups to perform specific duties that mitigate phishing scams while setting out expected payout levels to victims. 

Drained Accounts

As part of that, authorized financial institutions will have to undertake real-time fraud surveillance to detect unauthorized transactions that could end up emptying client deposits.

«This is in recognition of the severe impact on scam victims if their accounts are drained without their knowledge,» the announcement indicates.

Client Friction

The MAS indicated that retail clients could see more obstacles when it came to large-value transactions given the fraud surveillance requirement, although the regulator will continue to study stronger authentication solutions to mitigate the impact.

A media statement by the Association of Banks (ABS) released Thursday indicated much the same by saying that consumers could expect «some friction».

«At times, legitimate transactions may be put on hold or blocked while financial institutions attempt to contact their customers to verify the transactions,» the announcement indicated.

Discretionary Payouts

When it came to payouts, it said that member banks would have discretionary frameworks and that reimbursements would be looked at on an individual basis and be reviewed against the sophistication of scam typology and efforts the clients took to protect themselves.

Hong Kong, for its part, seems to be taking a different, albeit more direct approach. As the «South China Morning Post» reported on Friday after conducting an interview with police commissioner Raymond Siu.

Pop-up Warnings

According to him, bank clients will get pop-up warnings on ATMs from next March onwards if the transaction is deemed suspicious, something that is already being undertaken with the city’s online, app-based Faster Payment System (FPS).

But all this taken together clearly poses the first major challenge to bank digitalization efforts and may even prompt some institutions to resort to older forms of legacy banking that are harder to defraud as easily as online channels.

Blackmailing Children

The severity of the current plague should also not be underestimated, with Siu indicating that children appear particularly prone to «naked chat» blackmail attempts.

He also took stock of the larger picture, saying that losses related to scams reached HKD$6.41 billion (about $820 million) in the first three quarters of this year alone and that 715,000 alerts have been sent related to FTP transactions since their introduction.

Slower Increase

The Hong Kong police do seem to be having a measure of success, with the number of scam cases up 8.3 percent this year, a significant fall from the 52.5 increase in 2023 and 39.7 rise in 2022.

Still, he remained wary given the ability of criminals to change the way they operate when governments and finance figure out what they are doing, and he expects deepfake scams to become the next major trend.

Highly Debated

Digitalization may even end up mimicking what is happening related to electronic voting in democracies around the world. 

A World Economic Forum (WEF) piece shows that it is more frequently used now than 20 years ago, but that it remains heavily debated. Some countries, such as France, have introduced it but don’t use it for national or local elections. Others, such as Germany, remain resistant. In Switzerland, an initiative was launched in 2023 asking voters to decide on whether to ban it entirely in a future referendum.

Different Approaches

Banks may end up following that kind of patchwork approach, with some processes and services rolled back, particularly if digitalization ends up slowing things down more than older ways of doing things.

A decade back, no one would have said that paper would be a permanent fixture in government and finance. But now, that, and the humble, handwritten signature, along with a photocopied ID, may have more of a future than we once thought.