CNA Explains: Banks could hold or stop transfers to fight fraud – what does it mean for customers?

SINGAPORE: From Oct 15, a new anti-scam measure will allow banks to hold or reject transfers from accounts with balances of at least S$50,000 (US$38,700) if withdrawals over 24 hours amount to more than half of the total funds.

Major retail banks including DBS, OCBC, UOB, Citibank, HSBC, Maybank and Standard Chartered will implement the safeguard for all current and savings accounts, including joint accounts.

It will apply to all digital banking transactions done through bank apps and internet banking.

Some legitimate digital banking transactions, including recurring standing instructions or GIRO payments, will be exempted.

How will it work?  

The safeguard is triggered when a digital banking transaction, together with other withdrawals in the 24-hour period, results in at least 50 per cent of an account’s balance being transferred out.

The transaction and subsequent transactions will either be held for 24 hours or rejected. 

Customers will be informed on their mobile banking app or internet banking platform, and given instructions on next steps to take.

During the 24-hour cooling period, customers who realise that they have been scammed can then cancel the transaction. If the transactions are legitimate, the funds will be released after the cooling period.

The idea is to create an additional filter, said Associate Professor Kelvin Law of Nanyang Business School, Nanyang Technological University.

“So that the consumer, the bank, the police can have enough time to actually find out, is there any problem with the transaction,” he said, adding that the new safeguard counters typical scam patterns where accounts are drained in large amounts quickly.

Why is this being introduced?

People in Singapore lost S$456.4 million to scams in the first half of the year, according to mid-year figures released by the Singapore Police Force in August.

Although this amount is 12.6 per cent less than what was lost during the same period last year, experts say it's no occasion for people to let their guard down.

Ms Frances Yong, founder of cyber safety awareness and digital literacy firm White Byte, pointed out that scams have continued to evolve with new technologies.

“We might think that the seniors are the ones who will fall prey to scams but any one of us, you and me, is also as much a victim as anybody else could be,” she said. 

Ms Radish Singh, an ASEAN financial services risk management leader at EY, called the latest safeguards "necessary".

"While scam cases have declined thanks to stronger industry countermeasures, scammers are getting more sophisticated," she said. "Given how quickly digital transactions move, intervention often comes too late."

How else can banks intervene?

Prior to the latest measure, banks were already strengthening their technology capabilities and control frameworks in recent years, said Ms Singh.

In 2023, major lenders rolled out anti-malware measures to restrict customers from accessing banks’ digital services if apps from unverified app stores are detected.

Several banks also introduced a “money lock” feature, which allowed customers to set aside funds that cannot be transferred out of their accounts digitally.

In October 2024, the Monetary Authority of Singapore (MAS) rolled out guidelines on a framework to define how losses from phishing scams will be shared between financial institutions and consumers.

Under the framework, financial institutions must impose a 12-hour cooling-off period upon activation of digital security tokens, during which certain activities cannot be carried out.

More recently, parliament passed a Protection from Scams Bill in January, which allows the police to order banks to restrict transactions of potential scam victims.

Is the bank-customer dynamic changing?

Taken together, some may perceive banks as exercising increasing control over customer funds. But Assoc Prof Law emphasised that legally speaking, the money in the bank still belongs to customers.

White Byte’s Ms Yong added that the risk of giving customers full control is that they may be unaware of precautions to take.

Setting a benchmark and then possibly adjusting it based on feedback is hence a better option, she said. “It needs to start from somewhere, and this is where we are starting from.”

Experts called for more data and feedback to assess whether the thresholds - S$50,000, 50 per cent of funds and the 24-hour cooling period - are optimal.

Assoc Prof Law said it may not be helpful for customers with large balances, as a significant amount of money could still be withdrawn at the upper limit of the 50 per cent threshold.

He foresees people strategically transferring money just below the threshold instead, say at 49 per cent.

Ms Yong noted that on the other hand, the 50 per cent benchmark could be too low for the lower-income.

“Once we have started rolling it out, and then from our learnings, I think we can then start improving on what the threshold is for different segments of the community,” she said. 

What should customers look out for?

With the additional measure, the Association of Banks in Singapore (ABS) said customers may experience delays in digital payments and transfers, including for legitimate transactions.

As such, they are advised to plan time-sensitive banking transactions in advance.

“If we foresee or predict a big transaction, now we need to plan earlier …. That's the takeaway,” said Assoc Prof Law.

For now, those who prefer more flexibility may consider setting up another account and ensuring the amount they put in does not exceed S$50,000, he added.

He concluded that while the latest move may have added friction to the banking process, it will fundamentally help lower scam activity.

EY’s Ms Singh said those confident in the legitimacy of their transactions can simply verify them with their bank. They could also maintain lower account balances or conduct physical transactions at bank branches.

“The enhanced detection and surveillance systems, though not always definitive, are designed by banks to target transactions that warrant attention, minimising disruption to routine payments,” she said.

Ultimately, if one scam can be prevented, it is already worth the new guardrails, said Professor Hannah Yee-Fen Lim of Nanyang Business School.

“We have been losing too much hard-earned money to scammers the past few years. There are psychological and emotional tolls too," she said.

"It seems that we have become a society that prioritises convenience over security and safety, which is not the best position to be in."