Card Fraud Risks and AML Measures to Detect Unauthorized Use

Card fraud happens when someone illegally uses a debit, credit, or prepaid card to steal money or make unauthorized purchases. Criminals may steal card details, clone cards, or trick people into giving their information through scams. Card fraud is often linked to money laundering and financial crime, making it a key focus of AML (Anti-Money Laundering) compliance.

Common Types of Card Fraud:

• Stolen Cards: A thief physically takes a card and uses it.
• Skimming: Criminals install hidden devices on ATMs or payment machines to steal card details.
• Phishing: Scammers send fake emails or messages to trick people into sharing their card information.
• Fake Identities: Fraudsters use stolen or fake details to apply for new credit cards.
• Account Takeover: Criminals hack into accounts and make unauthorized transactions.

Example:

Scenario: Stolen Card Used for Luxury Purchases

1. Background:

• Emma, a bank customer in London, loses her credit card.
• A fraudster picks it up and quickly starts making purchases.

2. Fraud in Action:

• The thief buys expensive jewelry worth £5,000 at a store that does not check ID.
• They then book a five-star hotel stay for £2,000 using the stolen card.

3. Detection and Investigation:

• Emma notices unauthorized charges on her statement and reports them to her bank.
• The bank’s fraud detection system had already flagged these unusual transactions.
• The bank blocks the card, refunds Emma, and reports the case to AML investigators.
• CCTV footage from the jewelry store helps police identify and arrest the fraudster.

Key Takeaways:

• Card fraud involves the unauthorized use of payment cards to steal money.
• Banks monitor transactions for suspicious activity and can block fraudulent charges.
• Customers should report lost or stolen cards immediately to prevent fraud.
• AML and fraud teams work together to track down criminals and recover stolen funds.