Starting Thursday, European banks will implement a new rule requiring enhanced verification for bank transfers. This measure aims to combat fraud effectively.
Verification Process Enhancement
Beginning on October 9, an automated system will verify the recipient’s account name against their IBAN. The Verification of Payee (VoP) system will check these details every time a transfer order is initiated. This quick process will take approximately five seconds.
If the name matches the provided IBAN, the transfer proceeds without issues. However, partial matches, such as minor spelling errors, will prompt a notification to the customer. The customer will then need to decide whether to proceed with the transfer.
Avoiding Common Mistakes
- Customers are advised to enter accurate names when adding new beneficiaries.
- The French Banking Federation suggests avoiding informal labels like “Mom” or “Electrician” to prevent mismatches during verification.
Addressing Fraudulent Activities
This new verification process aims to curtail fraudulent activities, with estimated losses exceeding €183 million in 2024, according to Banque de France. Previously, banks only verified the IBAN, which did not ensure the account belonged to the intended recipient.
Julien Lasalle, Secretary of the National Payment Means Committee at Banque de France, noted that this gap allowed fraudulent activities, such as invoice hijacking, where a scammer alters an IBAN on a legitimate invoice.
Exemptions from the New Rule
It is essential to note that this verification rule does not apply to certain countries in the Single Euro Payments Area (SEPA) outside the European Economic Area. For instance, the United Kingdom and Switzerland are exempt from this requirement.
Additionally, transfers between parts of France in the Eurozone and the French territories in the Pacific, such as New Caledonia and French Polynesia, will not require beneficiary verification.
