ECJ has issued clear guidelines on the transparency duties of banks!

ruling from ECJ in the GAL BARAK case is still pending

ECJ has issued clear guidelines on the transparency duties of banks!

Cybercrime has become a threat to our society!

Recent data reveals an alarming rise in cybercrime, posing a significant threat to our global society. A comprehensive study conducted by the renowned digital industry association Bitkom, underscores the gravity of the situation. It indicates that cyberattacks, often linked to organized crime groups, have substantially increased. Specifically, German companies are witnessing a spike in attacks orchestrated by criminal gangs. A staggering 61% of the affected companies identify these organized groups as the culprits, a sharp increase from 51% last year and 29% two years prior. The study further estimates a potential economic impact of €206 billion for Germany in 2023 due to cybercrime.

However, the corporate sector isn’t the sole target. Every day, countless retail investors fall prey to cybercriminals. Tactics like fraudulent phone calls, cybertrading scams, and sophisticated financial schemes have stripped many retail investors of their life savings, leading to emotional and financial turmoil. Europol says such attacks account for losses exceeding €50 billion annually in Europe.

The Crucial Role of Payment Service Providers in Cybercrime

At the heart of these cybercrimes is the motive for financial gain. Ensuring a seamless flow of funds from victims to perpetrators is paramount for these cybercriminal organizations. We elaborated about this fact already very often (see here). While victims employ various methods like card transactions, wire transfers, or cryptocurrencies to transfer money, payment service providers invariably play a role.

Regrettably, these providers often side with the perpetrators rather than the victims. Despite years of loyalty, victims find their banks unwilling to assist once they realize they’ve been scammed. Citing bank secrecy and data protection rules, these institutions frequently decline to share crucial information about the receiving parties, leaving victims in the lurch.

usual wording of PSPS refusing assistance

However, a recent ruling by the European Court of Justice highlights that payment service providers are in breach of European regulations by withholding such information.

EU Directive 2007/64: Shedding Light on Payment Transparency

The EU Directive 2007/64, under the section ‘Transparency of conditions and information requirements for payment services’, mandates that the payer’s payment service provider must furnish details that allow the payer to identify the payment transaction. This includes information about the payee.

In a landmark decision (16.3.2023 C-351/21), the European Court of Justice emphasized that payment service providers must disclose all relevant information to identify the beneficiary. This isn’t merely an “effort” but an unequivocal “obligation.” Even if the beneficiary bank withholds information, the transferring bank must provide the necessary details to its customers.

Our advice!

This pivotal decision not only aids banks by absolving them from the supposed obligation of maintaining banking secrecy but also impedes fraudsters in their illicit activities.

For victims of such scams, it’s imperative to present this decision to their respective banks or credit card providers, urging them to disclose the relevant information. After all, it’s not a mere request but a legal obligation


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