Despite repeated warnings, financial fraud continued unabated throughout 2024, leaving victims counting their losses.

The issue was highlighted by the Financial Arbiter, who expressed concern at the growing number of consumers falling prey to increasingly sophisticated fraudsters, now operating on what he described as an “industrial scale.”

“Increasingly, we are witnessing a shift from one-off authorised push payment (APP) fraud to relationship-based schemes, where fraudsters manipulate victims into making multiple substantial payments,” remarked Arbiter Alfred Mifsud in the 2024 Annual Report. “These payments are made in pursuit of false promises of high investment returns, which exist only on fraudulent virtual platforms.”

These elaborate scams, commonly referred to as “pig butchering,” typically begin with a prolonged confidence-building phase. Over weeks or months, fraudsters build rapport with their victims—posing as credible professionals with expert investment knowledge. Only once trust is established do they encourage the victim to make a small initial investment in a supposed “get-rich-quick” opportunity.

When the victim sees fake profits on fabricated dashboards or apps, they are enticed to invest further. Eventually, when they attempt to cash out these ‘profits’, they are asked to make additional payments—often under the pretense of paying taxes, meeting liquidity thresholds, or similar fabricated requirements.

“We’ve seen tragic cases where victims borrow from relatives, liquidate pension funds, or sell valuable assets—firmly believing their profits are imminent,” the Arbiter noted. “But eventually, reality hits—with devastating financial and psychological consequences.”

Some of the complaints received involved highly educated individuals, underlining that fraud is not merely a result of naivety or lack of education. In fact, fraudsters often target those with substantial financial resources, using a calculated mix of fear and greed to manipulate even discerning minds.

In response, the Office of the Arbiter for Financial Services (OAFS) has launched two key initiatives:

  1. Guidance to financial service providers on their responsibility to build monitoring systems capable of detecting suspicious payment patterns—and their duty to warn customers when such patterns are identified.
  2. A proposed legal change to recognise fraud victims as eligible complainants before the Arbiter, even if they are not traditional customers of the financial service provider involved.

This legal reform would allow the OAFS to consider complaints and rule on their merits, rather than having to declare lack of jurisdiction—even in cases where a financial service provider may have facilitated the fraud, whether knowingly or negligently.