European Bank Fraud Trends: What You Need to Know

A new Finextra industry event is bringing European banking leaders together to address what they're calling a "fraud reality check", and the patterns they're seeing should be on every US compliance officer's radar. Fraud complexity is rising. Control frameworks need to catch up.

Why European Fraud Trends Matter to US Firms

Fraudsters don't care about jurisdictional lines. The techniques hitting European banks today tend to show up in US markets within 12-18 months. If you run compliance for a broker-dealer or RIA with European correspondent relationships, or if you're processing cross-border transactions, this is your early warning system.

I've seen this play out before: fraud schemes evolve faster than most firms' controls. That gap is where firms get burned.

Key Patterns to Watch

• Authorized push payment fraud -- customers are being manipulated into initiating fraudulent transfers themselves, bypassing traditional authentication controls
• Synthetic identity fraud -- fabricated identities built from real and fake data elements are defeating standard KYC processes
• Account takeover acceleration -- credential compromise leading to faster exploitation windows
• Cross-border complexity -- fraudsters exploiting jurisdictional gaps in real-time payment systems

These aren't theoretical concerns. European banks are seeing them daily.

Operational Implications for US Compliance

FINRA issued Regulatory Notice 26-02 in early January 2026 regarding changes to FINRA Rule 2166, and the comment period for this proposed change recently closed at the end of March.  The regulatory notice proposes amendments to FINRA Rules 4512 and 2165 and proposed Rule 2166 (Temporary Delays for Suspected Fraud). These amendments and a proposed new rule are designed to modernize and assist member firms in protecting customers from fraud and financial exploitation.  Be sure to read it and familiarize yourself with the three areas outlined in the notice.

Three areas deserve attention:

Trusted Contact Amendments. To increase the adoption and effectiveness of trusted contacts, FINRA proposes to permit member firms to use the alternative term “emergency contact” and to provide additional flexibility for a customer to name a trusted or emergency contact for use across all the customer’s accounts at the member firm.

Temporary Hold Amendments. FINRA proposes to extend the maximum temporary hold period under Rule 2165 from 55 business days to 145 business days, in three 30-business-day increments, subject to safeguards. FINR also proposes additional modifications that provide enhanced clarity and flexibility to make the rule more effective.

New "Speed Bump" for Suspected Fraud. To offer member firms a tool to protect all customers (irrespective of age or capacity) from suspected fraud, FINRA proposes new Rule 2166 to permit a temporary delay of up to five business days on disbursements or transactions when there is a reasonable belief of fraud. This separate safe harbor framework, modeled on our existing Rule 2165, would permit member firms to use a “speed bump” to alert a customer of suspected fraud.

The Bottom Line

European regulators are signaling that reactive fraud controls are no longer acceptable. FINRA is trying to make necessary rule changes that would allow member firms the ability to proactively thwart these financial fraud schemes.  

Fraud losses hurt customers. They hurt firms. They invite regulatory scrutiny you don't want. Getting ahead of these patterns should be on your radar.

Jay Proffitt, Founder and CEO, GiGCXOs