The Bank of Lithuania is proposing significant regulatory changes to protect customers from fraud, including requirements for banks to reimburse customer losses due to fraud.
The Bank of Lithuania is responding to a rise in financial fraud with a series of proposed changes aimed at enhancing customer protection and accountability for financial institutions. These measures, set to be discussed in the upcoming spring session of Parliament, would require banks to compensate clients for losses incurred through fraudulent activities, particularly in cases where criminals impersonate legitimate financial services. The urgency of these reforms is underscored by the growing prevalence of fraud, which LB Board Chair Gediminas Å imkus described as a wildfire that needs effective containment strategies.
In addition to compensation obligations, one of the pivotal changes includes the definition of payment authorization. Under the new rules, a payment operation would not be considered authorized unless initiated by the customer themselves or done with their explicit consent, regardless of whether the payment had been confirmed using the user's credentials. This move is designed to clarify the responsibilities of financial institutions in the face of increasing sophistication in fraudulent schemes.
These proposals come in the wake of various fraud incidents, including the recent uncovering of a "SIM box" farm in Vilnius where scammers created fake accounts and payment systems. The Lithuanian government aims to equip the financial sector with the necessary tools to address and extinguish the growing threats of fraud, thereby creating a more transparent and secure financial environment for citizens and market players alike.
