Honourable senators, customers at Canadian banks are increasingly the victims of fraudulent activity that is occurring at record levels and growing at an alarming rate. There are countless heart-wrenching stories of individuals and small businesses having funds stolen because fraudsters have presented fake identification at a bank branch, sent a fraudulent wire transfer request to their bank or re-dated and reused their cheques, among countless other scams.

Increasingly, sophisticated global criminals profit from systemic weaknesses in our banking system due to outdated policies and a chronic under-investment in new technologies. This will only get worse as digital technologies advance. Nationally, our governments and regulators need to act so that our banks are compelled to implement state-of-the-art risk mitigation measures and provide restitution when those measures are breached.

Quantifying the scale of the problem is difficult. One reason is that fewer than 10% of fraud victims report the crime, according to the Canadian Anti-Fraud Centre. Despite that low reporting rate, they estimate that reported fraud cost Canadian consumers $530 million in 2022, a 40% increase from 2021.

Canadians have shared stories with me in which one of the big five banks did not stop fraudulent acts where their customers had no way to intervene and prevent the crime, yet the bank still refused to take any responsibility. A big five bank even failed, on two occasions, to report the same crime to their internal fraud department.

The Ombudsman for Banking Services and Investments, whose purpose is to help bank fraud victims, has victims sign an NDA before agreeing to investigate. If the bank has followed its internal policies, it seems that the ombudsman has no authority to challenge demonstrably ineffective policies and force the bank to provide the victim with restitution.

In a world where the identity verification processes used by our banks are easily defeated by criminals, no one is reliably protecting the victims of fraud — not our banks, not the Financial Consumer Agency of Canada and not the Ombudsman for Banking Services and Investments.

Solutions exist, like comparing physical identity to the information and photo in provincial databases. In two thirds of OECD countries, digital identity platforms provide their citizens with greater control, security and privacy when accessing private and government services. Advanced technologies can be used to constantly scan account activity to rapidly identify exceptional or unexpected transactions and hold them for secondary verification by the customer.

Colleagues, global criminals are increasingly targeting the savings of Canadians. It’s only going to get worse if our regulators, through our banks, don’t begin to aggressively fight back. Thank you.