From 9 October banks will automatically check that an account number ties in with the recipient’s name each time money is transferred to that account. If the name doesn’t match the account number, the person transferring the money will receive a warning. The Federal Consumer Protection Minister Rob Beenders (Flemish socialist) says that the aim is to reduce the risk of fraude, particularly invoice fraud.
Banks to check that name ties in with account number in an effort to combat invoice fraud
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Currently when you make a bank transfer the account number is not checked against the name of the recipient. Sometimes, fraudsters abuse this by sending out fake invoices from, for example, a utilities company. The invoices look the same as genuine invoices.
The only difference is that account number is the fraudster’s rather than the utility company’s. Currently banks are unable to check that an account number matches the name of a recipient. This will change this autumn.
From 9 October banks will be obliged to check whether an IBAN number matches the recipient’s name.
In order to make this possible, the banks will have to develop an algorithm that checks and matches the identity of all their account holders with their respective account numbers. Mr Beenders adds that the when developing their algorithm, the banks will be asked to take into account slight spelling errors, so that “close matches” are able to pass.
The new system will be introduced because of new European rules that are designed to reduce fraud. IBAN-name-check systems already exist in The Netherlands, France and the UK. Mr Beenders says that since the system was introduced in The Netherlands, the number of cases of bank account-related fraud has fallen by 81%.
Nevertheless, the system is not 100% watertight, as individuals can opt to ignore the warnings if they so wish.