Belgian banking sector is working on IBAN name checks in the fight against invoice fraud
19 May 2022 - 4 min Reading time
The fight against payment fraud is very high on the agenda of the Belgian banking sector. The sector is therefore studying all useful solutions, including those from other countries, that effectively help in the fight against this fraud.
- In invoice fraud, scammers falsify an invoice. They intercept a real invoice, change the account number and send the corrected invoice.
- After the Netherlands and the United Kingdom, the Belgian banking sector will also develop the IBAN name check for digital transfers. The IBAN name check is a tool to curb certain forms of fraud with transfers, in particular invoice fraud.
What is invoice fraud?
The name says it all: in invoice fraud, scammers falsify an invoice. They intercept a real invoice during shipment, change the supplier's account number (with a 'money mule' account number) and send the adjusted invoice. Both individuals and companies can become victims.
When the customer enters the transfer order for this invoice, the customer's bank cannot detect that the account number of the money mule does not match that of the supplier, because it does not have data for this because it is stored at the beneficiary's bank. But this will change with the IBAN name check.
What does an IBAN name check entail?
During the entry of a transfer order, the bank checks whether the account number (IBAN) and the name of the beneficiary match. If this is not the case, the bank will notify you when you wish to make a transfer. You will then be able to confirm or not the transfer order.
However, the implementation is an operational challenge, partly because of the great variation in spelling of first and last names and the use of abbreviations (example: Janssen; Janssens; Jansen; VZW Janssen;…). The system will, to a certain extent, take these variations into account.
Fight against invoice fraud
Please note: the IBAN name check does not, however, help with phishing and other fraud where a third party, the phisher, initiates payments on the basis of codes that have been (previously) obtained via email or telephone. Nor does it help in those cases where the holder of the account is manipulated, for example by telephone, to make a certain transfer. That is possible, because you can choose not to take into account the message that there is "no correspondence" between the name and the account number of the beneficiary.
The IBAN name check is therefore a tool for the consumer who ultimately decides whether or not to take the “warning” into account.
Timing
In a first phase, the system will check the Belgian IBAN numbers and not yet the foreign account numbers. The latter is part of a European decision and is currently being considered by the European Commission.
De Belgische sector wenst echter niet te wachten op de finale beslissing van deze overweging en maakt, via sectoroverleg, werk van zo’n systeem. Een wetgevend initiatief op Belgisch niveau lijkt dus op dit moment niet nodig, aangezien een Europees initiatief wordt verwacht op het einde van het jaar, en de sector intussen gestaag aan een Belgische oplossing werkt.
