PSR updates APP policies but ‘reimbursement alone cannot prevent fraud’
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The extensive focus on fraud seen across the payments and finance sectors in 2024 was bound to lead to some commercial activity in 2025, as stakeholders realise the opportunities in providing much-sought-after solutions.

M&A activity is the most obvious example of this. Also unsurprising is the inclusion of AI as a focus of many commercial partnerships and acquisitions, with a lot of hype circulating around the technology’s use for identifying potentially fraudulent actions.

In a recent example of this, Chainalysis, a blockchain-focused fintech company, announced that it had acquired Alterya, a fraud detection solution which leverages AI. Chainalysis states that the acquisition has provided it with real-time fraud protection capabilities for payments and fraud detection abilities during KYC for exchanges, blockchains and wallet providers.

This acquisition may prove fruitful for Chainalysis due to the company’s focus on government contracts. The firm believes that Alterya’s insights around scams and fraud trends like ‘pig butchering’ – whereby a victim is persuaded to gradually invest more into a fraudulent crypto scheme – will prove useful for government agencies.

In the US, where Chainalysis is headquartered in New York, around one-third of consumers have reported financial losses as a result of scams, according to data from Visa’s Featurespace subsidiary. Crypto-related fraud has become a particular area of concern for government law enforcement agencies like the FBI.

Perhaps the most widely discussed market being impacted by fraud is the UK, however. This is true not just because of the impact fraud is having on the country’s economy and its consumers but also due to the debate around the regulatory reaction and how it is being handled.

In October, the Payment Systems Regulator (PSR) introduced new rules around reimbursement, requiring banks and payments firms to reimburse APP fraud victims up to £85,000 – the figure was previously £415,000 but was dropped after an extensive industry backlash.

Stakeholders, including banks themselves, have noted that the new rules do provide firms with more of an incentive to act against fraudsters and offer another layer of protection for victims. However, some observers believe that more action is needed on how to prevent fraud, and not just on how to react to it.

“In fraud, my sense is that the banks themselves, they are acting in real time,” said Adrian Searle, Director of the UK’s National Economic Crime Centre (NECC), speaking at the Financial Crime 360 conference in late 2024.

“They’ve got a very good incentive to make sure, where they can, that they’re stopping those payments from happening – but if you’re looking at it from a system and partnerships perspective, in particular law enforcement, we’ve got some way to go.”

The UK has addressed recovery in recent months, and though the payments sector has protested that Big Tech firms should shoulder some more responblity in this process – something which has apparently been acknowledged by the Labour government – most agree that so far, the approach has been working.

What it needs to do now is address fraud prevention, as NECC’s Searle remarked at FC360 last November. Again, the government has been putting some effort in here, notably giving new powers to UK banks late last year.

As 2025 progresses, we can probably expect more government action around fraud, not just in the UK but elsewhere. AI will also continue to be a big talking point, whether as a general buzzword or as an effective technological solution to fraud.

Companies like Chainalysis will be keenly watching these developments, as the potential for government contracts for blockchain or AI-backed fraud prevention solutions could prove to be a lucrative niche in the coming months.