Fraud monitoring has shifted from a discretionary control to a core prudential and conduct requirement across every major regulatory jurisdiction. Financial institutions that fail to build structured detection and prevention capabilities now face enforcement action, fines and rising fraud losses that erode both capital and customer trust.
According to ZIGRAM, the scale of the problem is significant. UK fraud losses reached £1.168bn in 2023, with authorised push payment fraud accounting for roughly £460m of that total, while the Home Office estimates the broader economic and social cost of fraud at £14.4bn for the 2023-24 financial year.
Regulators now expect monitoring coverage extending well beyond payments alone, taking in logins, device changes, beneficiary updates and session-level anomaly detection.
Requirements vary by jurisdiction but share common foundations. In the US, FinCEN requires suspicious activity reports to be filed within 30 days of detection, or 60 days if no suspect is identified. The EU’s PSD2 and EBA guidelines mandate fraud reporting broken down by payment instrument, channel and authentication method.
The UK’s FCA and PSR focus on authorised push payment fraud performance reporting and reimbursement rules, while India’s RBI Master Directions require Early Warning Signals and Red Flagged Account frameworks alongside board-level governance through Special Committees of the Board.
Governance sits at the centre of regulatory expectations. Boards must approve fraud risk appetite, review aggregate fraud metrics and ensure independent challenge is properly resourced.
The US Office of the Comptroller of the Currency expects institutions to regularly assess fraud exposure and align policies, staffing and monitoring with their size and complexity.
Technology expectations are also rising. Regulators increasingly want risk-based, data-driven detection tools with explainable logic, including machine learning models that adapt to evolving fraud patterns, device intelligence, and flexible rules engines.
The EU AI Act adds a further layer, requiring transparency and human oversight wherever automated systems are used in fraud prevention.
In India, RBI Master Directions dated 15 July 2024 apply to commercial banks, Regional Rural Banks and All India Financial Institutions, with 2026 developments set to consolidate stricter obligations around 24/7 digital payment fraud monitoring and near real-time alerting for UPI and other fast payment rails.
For compliance and risk teams, the practical challenge is translating regulatory text into operational rules, scenarios and escalation workflows, then proving to supervisors that governance is active rather than performative.
Read the full ZIGRAM post here.
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