Banks Urged to Strengthen Safeguards Against Rising Romance Fraud

FCA calls for tighter controls as emotional scams surge leaving victims devastated and banks under scrutinyThe Financial Conduct Authority (FCA) has urged banks and payment firms in the United Kingdom to implement stronger controls and monitoring systems to combat the growing threat of romance fraud. The warning follows a new review that found numerous missed warning signs allowing customers to lose thousands sometimes hundreds of thousands of pounds to sophisticated scammers.

The regulator’s review examined six banks and payment firms and discovered multiple cases where staff failed to detect suspicious transactions. One victim lost £428,000, another made 403 payments amounting to £72,000 and a third sent money to transfer cryptocurrency to a supposed partner in Iraq.

Romance fraud typically involves scammers building emotional relationships with victims online often through dating sites or social media before manipulating them into sending money. The FCA said the crimes are becoming more complex, and many victims are too embarrassed or ashamed to report their losses.

According to the City of London Police, romance fraud accounted for £106 million in reported losses last year. However, the FCA estimates the real figure is far higher due to underreporting.

The FCA’s findings revealed inconsistencies in how financial institutions identify and respond to potential romance scams. In many cases, banks missed clear “red flags.” For example, one customer made six payments totaling more than £131,000 to an overseas account without raising suspicion. In another case, a victim made 15 international transfers worth £190,000, claiming to be purchasing property abroad. Despite multiple accounts and inconsistent payment reasons, no further verification was carried out.

The report also revealed troubling details about how victims were treated after reporting fraud. In several cases, financial firms failed to offer proper aftercare or support. “One victim expressed suicidal thoughts, and another received threats of violence from the fraudster,” the report said, emphasizing the need for banks to take a more compassionate approach to fraud victims.

Steve Smart, the FCA’s joint executive director of enforcement and market oversight, condemned the emotional and financial toll of these scams. “Romance fraud is a vicious crime. All too often it is the vulnerable that fall victim. The impact financially and personally can be devastating,” he said.

The FCA’s review found that 85% of romance scams originated from connections formed on dating apps or social media platforms. Fraudsters often portray themselves as professionals working abroad, such as military personnel or engineers who cannot meet in person. They then fabricate emergencies, like medical issues or travel crises to justify urgent requests for money.

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The regulator is now calling on banks and payment providers to strengthen their monitoring systems and enhance employee training. It also recommended developing better protocols for detecting unusual payment patterns, particularly for international transfers and large transactions that do not match a customer’s normal spending behavior.

Michelle Pilsworth, Santander’s head of fraud, said her bank had seen almost £5.5 million stolen through romance scams since the beginning of the year. “Fraudsters are adapting, and we’re now seeing more cases where victims are told to buy and send gift cards instead of transferring cash,” she said.

Consumer advocacy group Which? also weighed in, warning that institutions failing to protect their customers should face regulatory action. The group argued that stronger accountability would incentivize financial firms to invest more in fraud prevention and customer protection systems.

Romance fraud continues to evolve alongside new technology and communication platforms, making detection more challenging. Experts warn that the emotional manipulation behind these scams often blinds victims to obvious inconsistencies in the fraudsters’ stories.

The FCA said it plans to continue monitoring banks’ anti-fraud measures and may introduce stricter regulatory requirements if significant improvements are not made. “We want firms to detect, prevent, and support victims of romance fraud more effectively,” the agency stated.

As the number of online relationships grows, regulators, banks, and consumers are being urged to remain vigilant. Financial institutions face mounting pressure to close the gaps that allow such crimes to flourish and to ensure that victims are treated not as negligent customers but as individuals who have been emotionally deceived and financially exploited.

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