To limit financial fraud, the responsibility of telecommunications service providers must be strengthened, as fraudulent schemes often begin both on social networks and at telecom operators, the Chair of the Finance Latvia Association (FNA), Uldis Cērps, said on Monday.
Representatives of the FNA met with the Chair of the Saeima Budget and Finance (Tax) Committee, Anda Čakša (New Unity), to discuss current challenges in combating financial fraud.
During the meeting, Cērps stressed that financial fraud schemes are becoming increasingly sophisticated and that the discussion should go beyond the financial sector to include issues of national security, the reputation of state institutions, and public trust.
He explained that clearer and stricter regulation is necessary because, in the absence of it, each party involved interprets the required changes differently. Implementing adequate security systems also requires significant investments.
After the meeting, Cērps told the LETA news agency that
it is specifically the responsibility of telecommunications providers that must be strengthened
within the fraud-prevention chain. Fraudulent cases often originate through social networks or telecom operators, while financial institutions are only the final stage.
“To fight fraud effectively, we must address every point where it occurs. Based on the experience of other countries, the focus must be on the duties of telecom operators,” Cērps said.
Among the necessary changes, he highlighted calls originating abroad while displaying a Latvian phone number — so-called “spoofing” calls. Currently, telecom operators can automatically detect such calls only when the Latvian-registered number belongs to the same operator’s network, allowing fraudsters to use a number from one network to call a number in another.
Cērps emphasized that
such calls should be legally banned or specifically identified so that the recipient can clearly see that the call is not originating from Latvia.
He also pointed out that SMS messages containing links to fraudulent websites should be identified and blocked, or at least accompanied by a warning that they may contain fraudulent content.
Cērps suggested creating a coordination system to allow telecom operators to exchange information with one another. A centralized list of fraudulent websites could also be established, enabling them to be blocked before they reach users.
“These types of changes illustrate what we will have to do constantly in Latvia, because fraudsters are becoming more inventive. Combating fraud is an ongoing process, and we must be ready to implement new measures every year or even more frequently,” Cērps said, expressing hope that the current proposed changes could be implemented within six months.
Čakša told LETA that the necessary changes fall into several categories. First, mobile operators must be required to block spoofing calls, which will require amendments to the Electronic Communications Law.
Second,
better information coordination is needed, including a blacklist of fraudulent links
to prevent them from reaching users. Third, harsher penalties must be introduced for cases where fraudsters impersonate state officials such as representatives of the State Police, the State Revenue Service, or the courts.
Čakša also noted that within the framework of the Digital Service Providers Pact, social platforms such as Facebook and YouTube must be prevented from distributing paid advertisements using fabricated videos of high-ranking public officials to promote fraudulent schemes. “It is possible to see who ordered and paid for these ads, but we must also be able to stop them,” she said.
She added that these legislative amendments could be advanced as a joint initiative of the Budget and Finance Committee, as financial stability falls under its mandate. However, the Legal Affairs Committee and the Economic Affairs Committee will also need to be involved. Work on the changes could begin in January.
In parallel, a multi-level working group on fraud prevention will be established, including a supervisory group in the Saeima and an operational group within the executive branch.
Cērps also informed that the FNA is developing an information-sharing tool, initially for the four largest banks and later available to other financial sector participants. This tool will allow participants to exchange information about specific fraud cases and emerging trends so that market players can react quickly and implement preventive measures. The tool may be ready early next year.
He concluded by noting that new anti-fraud measures will likely need to be introduced regularly, as fraudsters continue to invent new schemes.
As previously reported, in the first ten months of this year, clients of Latvia’s four largest banks lost a total of 10.038 million euros to fraud in which payments were approved by the clients themselves. A total of 5,763 fraud cases were recorded, including 3,089 phone-scam cases resulting in losses of 5.548 million euros.
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