Westpac NZ CEO Catherine McGrath highlights tension between privacy and fighting scammers

Putting a spotlight on tension between privacy and scams, Westpac New Zealand CEO Catherine McGrath says she'd like banks to be able to share more information.

Speaking at the INFINZ (Institute of Finance Professionals New Zealand Inc) Conference in Auckland this week, McGrath raised an interesting point about privacy versus potential crime.

A question during a panel discussion featuring the CEOs of the four big banks asked; "how can the major banks work together to support stopping recurring fraud? When an individual is exited from an institution they're able to open another account at another bank with no limitations."

McGrath responded first, initially in the context of mule accounts.

"Somebody can have an entirely legitimate account that works normally for a long period of time. They leave the country, they sell it to somebody else, suddenly this account is no longer legitimate. What you tend to find is you might get patterns of those accounts under similar names at different banks. At the moment, we're not allowed to share that information. So we've now got agreement that if you see a mule account, you can share the bank account number, so that then everybody knows not to put money into it," McGrath said.

"But what we're not allowed to do is say, 'Catherine McGrath has a dodgy account at Westpac. So please look at all the other Catherine McGrath accounts at the other banks and put them on watch.' So for me, that's a real lobbying point that we need to seep into even more than we have done already, to say if we're trading off privacy versus potential crime, which wins? And I think in that scenario, I would rather have more licence to share more information, and we have to be thoughtful about the potential consequences of that. But I think it's a great way to help New Zealanders more and faster," said McGrath.  

'No barrier to sharing information where there is a compelling public interest'

Asked about McGrath's comments, Privacy Commissioner Michael Webster said he was briefed by the New Zealand Banking Association last year on serious issues with mule accounts, and is supportive of measures put in place to protect New Zealanders from scammers.

"We have not yet had this specific issue about account patterns raised with us, but we can provide our views about how to best navigate privacy and account security concerns if this has now been identified as a potential weakness," Webster said.

"The Privacy Act permits the use and disclosure of information and isn’t a barrier to sharing information where there is a compelling public interest under the Act, for example, where it is necessary for the enforcement of a law that imposes a pecuniary penalty, or where the sharing is consistent with the reasons the information was obtained."

"We would need more information about the identified problem to be able to assess any potential impacts on privacy and determine how they could be practically addressed under the Privacy Act. We also recommend that agencies conduct a privacy impact assessment to identify any privacy concerns so they can be mitigated," Webster said.

'A website purporting to be ASB'

During the same discussion ASB CEO Vittoria Shortt highlighted the need for the Government, banking industry, telecommunications industry and big technology companies such as Google and Facebook's parent company Meta to all be involved in the fight against scams. Shortt said no one company, no one industry can stop frauds and scams.

"If you look at the way that frauds and scams have evolved around the world, 80% of it now in the UK is from Facebook Marketplace, which is why we need Facebook in the conversation," said Shortt.

"I had an incident where a crim set up a website purporting to be ASB. Now I need to get that taken down. I need to talk to Google, but that's too slow. I need a much faster way of actually making that happen. So I need to work with Google in New Zealand, with the whole industry, so that we can tackle these things quickly and at pace. so just sort of doubling down I guess, yes, we are working together to do the things that we can do. We are all investing very large sums of money on it. It is not going to be enough if we're left to do it on our own."

Asked by MC Miriama Kamo if Google and Facebook want in on this conversation, Shortt said: "Well, I'd say they need to be [in it]."

Artificial Intelligence (AI) and Generative AI are going to make it harder, Shortt added. With Facebook Marketplace she noted there are "lots and lots and lots of little ones [scams]." Meaning it's "much, much harder for us to pick up with our systems than some of the other ones."

Banks announced last week they will start rolling out a confirmation of payee service in November as the war against scams continues.

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