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The UK will become the first country in Europe to outlaw the possession and supply of SIM farms, in a bid to disrupt the tools deployed by organised fraud gangs.
The UK Home Office has set out for a new ban on SIM farms as it cracks down on using devices that enable scammers to send mass text messages or create large volumes of verified online accounts.
SIM farms, which can hold dozens or even hundreds of SIM cards, are frequently used by criminals to target thousands of individuals with scam messages and fraudulent schemes.
The new law will make it illegal to possess or distribute these devices without a legitimate reason, and is due to take effect six months after the Crime and Policing Bill receives royal assent.
Offenders in England and Wales will face unlimited fines, while those in Scotland and Northern Ireland may be fined up to £5,000.
According to the Home Office, there was a 19 percent rise in fraud cases last year, accounting for more than 40 percent of all reported crime in England and Wales, and losses from fraud against individuals are estimated to exceed £6.8bn annually.
This legislative move forms part of the government’s Plan for Change, which aims to improve and enhance public security, including countering the growing scale and sophistication of fraud.
The Home Office has also committed to publishing an expanded fraud strategy later this year, which will include measures to address the growing use of artificial intelligence, deepfakes and impersonation scams.
Fraudsters a fright, PSPs delight?
This win for consumer protection is as much so for their providers in the payments ecosystem, who are likely to be jubilant about this change. The ban enhances the effectiveness of existing fraud prevention measures, such as Confirmation of Payee and real-time transaction monitoring, by removing a key upstream method used to initiate attacks.
SIM farms are commonly used by fraudsters to send large volumes of scam texts, often impersonating banks or trusted organisations.
These phishing messages may contain malicious links or urge recipients to take urgent action, such as transferring money to another account, a tactic that is frequently deployed to carry out authorised push payment (APP) fraud, for example.
The ban offers several benefits overall to firms, and with compliance requirements placing greater liability on firms to reimburse victims of APP fraud, a reduction in scam activity could directly reduce financial losses. Fewer fraud attempts also ease the operational burden on compliance teams, who currently devote significant time and resources to managing fraud alerts, processing customer claims and monitoring suspicious transactions.
On the other side of the law, banning the possession and supply of SIM farms cuts off a major enabler of these scams, reducing the number of fraudulent messages reaching consumers, and potentially reducing the amount of reimbursements that payment service providers need to pay out to victims.
In addition to sending scams, SIM farms enable criminals to register numerous fake identities with banks, fintechs and telecom providers. These identities are often used to open mule accounts that receive stolen funds from APP fraud victims, and by limiting access to SIM farms, the creation of these accounts becomes much more challenging, which weakens the infrastructure fraudsters can rely on to move and hide money.
SIM farms also allow fraud operations to run cheaply and at scale, and removing access to these devices also harms their bottom line, as it increases the cost and risk for criminals, making mass fraud campaigns harder to execute and sustain.
Other fraud initiatives
Alongside the new ban, the government has launched the second part of an independent review of the UK’s fraud laws.
Led by Jonathan Fisher KC, the review is the first major examination of fraud legislation since 1986, and will assess how effectively law enforcement agencies detect, disrupt and prosecute fraud, and will consider challenges across every stage of the fraud lifecycle, from detection and investigation to prosecution and penalties.
The review follows the earlier publication of part one, which focused on disclosure in the digital age and recommended measures to modernise police processes. The findings are being taken forward by the Home Office, the Ministry of Justice and the Attorney General’s Office.
