Regtech Salv raises EUR 3.9 mln to combat APP fraud in the UK

Regtech Salv offers a range of tools to assist banks and service providers in combating financial crime. The investment will facilitate Salv's expansion in the UK, a market currently experiencing a sharp increase in Authorised Push Payment (APP) fraud, where criminals use social engineering attacks involving impersonation to trick consumers or businesses into transferring money to their accounts.

According to data from UK Finance, in 2022, the UK lost over GBP 1.2 billion to fraud, with APP fraud accounting for 40% of those losses. Despite a 1% drop in losses to APP fraud in the first half of 2023 – the volume of cases surged by 22% in the same year. Smaller banks and other financial institutions with less effective fraud prevention systems may not be able to cope with the rise in malicious attempts and be left in vulnerable situation.

Tackling fraud and seizing transaction monitoring opportunities

Salv's suite of products gives financial institutions the necessary tools to detect, prevent, and stop fraud, money laundering, and terrorist financing. Salv is used by 53 financial institutions across 12 countries. Providers, including LHV Bank, Swedbank, and SEB, rely on Salv for customer and sanctions screening, real-time inbound and outbound transaction monitoring, and risk scoring.

In response to raising APP fraud, the UK’s Payment Systems Regulator will introduce mandatory reimbursement for APP fraud victims in 2024, placing equal liability on both sending and receiving payment companies. So far, most banks and payment firms have overlooked inbound transaction monitoring, only focusing on funds leaving their client’s accounts. This represents an important growth opportunity for Salv, as per the press release.

Addressing UK's APP fraud refund changes and launching an AI rule generator

The regtech’s officials mentioned that as the UK moves towards shared responsibility for APP fraud refunds, financial institutions must adapt. Their suite, particularly the inbound monitoring feature, is critical for detecting fraudulent activities and money mule accounts, thereby reducing the financial institution’s liability. This feature, along with tools like their Bridge platform, is tailored to meet the evolving regulatory demands, and the soon-to-launched AI-based no-code rule generator will enable financial institutions to swiftly adapt to new criminal behaviour.

Currently in its final phase of testing, the AI-based no-code rule generator is set for launch in Q2 of 2024. Developed using data from existing manually created monitoring rules that have been validated and improved with transactional data, the tool allows for the implementation of new transaction monitoring rules without requiring developer support.

Salv’s toolkit also includes Bridge, a fully GDPR-compliant collaborative crime-fighting platform, enabling rapid tactical information exchange between its members. In Estonia, the Bridge network covers 99% of the market and contributes to the prevention of 50% of fraud cases and achieving recovery rates for stolen funds for APP fraud victims as high as 80%. These figures surpass the UK's current estimated baseline of 5%. Salv will initiate a closed pilot for a similar Bridge network in the UK early in 2024, in collaboration with a global banking group.