Banks and Communications Ministry Clash Over SMS Fraud Prevention

Israeli banks and the Ministry of Communications are locked in a dispute over how to combat SMS-based fraud, according to Israel Hayom. The fraudulent scheme involves criminals porting a victim's phone number to a new provider, thereby intercepting SMS messages containing verification codes for financial transactions. The Association of Banks is pushing for stricter procedures for mobile number porting, including an additional identity verification step after a number transfer before clients can receive banking confirmation codes. However, the Ministry of Communications argues that such measures could complicate customer transitions between mobile carriers and harm market competition.

Israel Hayom reports that the ministry and the Bank of Israel previously formed a joint working group that proposed an alternative mechanism. This plan would grant banks and credit card companies access to a database to check if a customer's number has been recently ported. If the system detects an unusual banking operation concurrently, it could trigger a more robust identity verification instead of SMS confirmation.

The core of the current disagreement centers on who will finance this proposed system. The Ministry of Communications insists that banks and credit card companies should bear the costs for servers, maintenance, and the necessary IT infrastructure. The banks, however, are reportedly resisting these expenses and are instead advocating for more stringent limitations on mobile number porting. Sources cited by Israel Hayom claim that more secure customer identification technologies exist, but banks are hesitant to adopt them due to their high cost. The ministry accuses the banks of attempting to shift the responsibility for fraud prevention onto the state.