Payment Fraud and AML Risk
In brief: Payment fraud becomes relevant to AML when the firm sees suspicious payment flows, fake invoices, redirected funds, or instructions that may involve criminal property.
Key points
- Payment fraud is a broad category, so record the exact facts.
- The AML question is whether funds, parties, or instructions create suspicion.
- Preserve payment evidence and escalate where needed.
What is payment fraud?
Payment fraud covers deceptive activity used to obtain, redirect, or misuse funds. It can include fake invoices, card fraud, account takeover, payment redirection, refund abuse, and authorised push payment scams.
For AML files, broad labels are less useful than precise facts: who paid, who received, what evidence supports the explanation, and whether the firm is being asked to handle funds.
AML red flags
| Red flag | Why it matters |
|---|---|
| Changed bank details | Could indicate redirection or impersonation. |
| Unusual payment route | Funds may be passing through an unnecessary account. |
| Weak invoice evidence | Transaction purpose may be false. |
| Urgent payment pressure | Client or counterparty may be trying to avoid review. |
Practical response
Keep payment records, update source-of-funds notes, review client risk, and escalate unresolved concerns internally.
This guide is general information for AML risk assessment, not legal advice or fraud-investigation guidance. Use it alongside the firm's AML procedures, Action Fraud, the Fraud Act 2006, and supervisor guidance.