Payment Fraud Prevention in France: Complete AML Compliance Guide (2026)

Payment fraud has become one of the fastest-growing financial crime risks facing organizations across France. As digital payments, instant transfers, and online banking continue to expand, criminals are exploiting increasingly sophisticated methods to deceive individuals and businesses. Developing an effective payment fraud France strategy is no longer just an operational priority. It has become an essential component of Anti-Money Laundering (AML) compliance and enterprise risk management.

For banks, payment service providers, fintech companies, and businesses of all sizes, fraudulent payments can lead to financial losses, regulatory scrutiny, reputational damage, and increased compliance obligations. French authorities such as TRACFIN and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) expect regulated entities to implement robust customer due diligence, transaction monitoring, and suspicious transaction reporting processes to combat financial crime.

This guide explains how payment fraud differs from money laundering, why AML controls play a critical role in preventing fraudulent transactions, and how organizations can strengthen their compliance programmes under French and European regulations. You will also learn about the most common payment fraud schemes affecting France, the legal framework supporting fraud prevention, and practical measures businesses can take to reduce risk while meeting regulatory expectations.

Key Takeaways

• Payment fraud and money laundering are distinct offences, but payment fraud often generates proceeds that criminals later attempt to launder.

• Strong AML controls such as customer due diligence, transaction monitoring, and suspicious transaction reporting help businesses detect fraudulent payments earlier.

• Business email compromise, invoice fraud, authorized push payment fraud, and account takeover remain significant threats in France.

• French organizations should align their fraud prevention programmes with guidance from TRACFIN, ACPR, and European regulatory authorities.

• A risk-based approach helps businesses reduce fraud losses while strengthening AML compliance.

Quick Answer

Payment fraud in France is the intentional use of deception, stolen identities, compromised payment credentials, or unauthorized account access to obtain money or financial services unlawfully. Although payment fraud is different from money laundering, the proceeds of fraud are frequently moved through the financial system to conceal their criminal origin. For this reason, AML compliance plays an essential role in payment fraud prevention. Through customer due diligence, Know Your Customer (KYC) procedures, transaction monitoring, fraud risk assessments, and suspicious transaction reporting, French organizations can identify high-risk activity while complying with national and European regulatory requirements.

What Is Payment Fraud?

Payment fraud is the unauthorized or deceptive manipulation of a payment transaction to obtain money, goods, or financial services illegally. Criminals may exploit weaknesses in payment systems, impersonate legitimate businesses, steal customer identities, or compromise bank accounts to initiate fraudulent payments.

Unlike accidental payment errors or processing mistakes, payment fraud always involves deliberate criminal intent. The objective is to deceive a victim into authorizing a payment or to gain unauthorized access to financial resources.

Businesses operating in France encounter payment fraud through many different channels. Fraudsters increasingly combine technical attacks with social engineering techniques, making fraudulent requests appear legitimate. This creates challenges for finance teams, compliance officers, and payment service providers responsible for identifying suspicious activity before funds leave an account.

It is important to distinguish payment fraud from money laundering.

Payment fraud is the crime that generates illicit proceeds. Money laundering is the subsequent process of disguising those proceeds so they appear to come from legitimate sources. While they are legally distinct offences, they frequently occur together.

For example, a criminal may convince a company's finance department to transfer funds to a fraudulent supplier account using fake invoices or impersonation techniques. Once the payment has been received, the criminals often move the money through several bank accounts, shell companies, or money mules to obscure its origin. At this stage, the activity becomes a money laundering concern.

This relationship explains why AML professionals monitor payment fraud indicators closely. Detecting suspicious payment behaviour at an early stage can prevent criminal proceeds from entering the wider financial system.

Common examples of payment fraud include:

• Invoice fraud

• CEO fraud

• Authorized push payment (APP) fraud

• Unauthorized bank transfers

• Account takeover

• Identity fraud

• Business email compromise

• Money mule schemes

The European Commission's financial crime framework emphasizes the importance of detecting suspicious financial activity early to protect the integrity of the European financial system. Effective payment fraud controls therefore complement AML programmes by helping organizations identify criminal activity before illicit funds are layered or integrated into the financial system.

French regulators also expect businesses to adopt a risk-based approach when assessing payment-related threats. Guidance published by the European Banking Authority (EBA) encourages firms to integrate fraud indicators into broader AML and customer risk management frameworks.

As payment methods continue to evolve, organizations must strengthen both fraud prevention and AML controls to keep pace with increasingly sophisticated financial crime.

The next section examines why payment fraud has become an increasingly significant challenge for businesses operating in France.

Why Payment Fraud Is Rising in France

Payment fraud has evolved alongside France's rapidly changing payments landscape. Digital banking, instant payments, mobile payment applications, and e-commerce have made transactions faster and more convenient for consumers and businesses. However, these developments have also created new opportunities for fraudsters to exploit payment systems and manipulate victims.

For compliance teams, payment fraud is no longer viewed solely as an operational or cybersecurity issue. It has become a financial crime risk that requires close coordination between fraud prevention, AML compliance, risk management, and internal audit functions.

The Growth of Instant Payments

Instant payments are transforming how money moves across Europe. Transactions that once took hours or days can now settle within seconds. While this improves efficiency, it significantly reduces the time available for fraud detection and intervention.

Once a fraudulent instant payment has been executed, recovering the funds becomes considerably more difficult because criminals often transfer the money through multiple accounts immediately after receipt.

According to the Banque de France, the increasing adoption of instant payments requires stronger payment security, enhanced fraud detection capabilities, and greater cooperation across the financial sector to maintain trust in digital payment systems.

Digital Banking Continues to Expand

French consumers and businesses increasingly rely on online banking platforms and mobile applications to manage financial transactions. Digital channels improve accessibility but also create additional attack surfaces for criminals.

Fraudsters commonly exploit:

• Stolen login credentials

• Phishing campaigns

• Fake banking websites

• Malware

• Remote access scams

• Social engineering

Instead of attacking payment systems directly, criminals frequently target users, persuading them to disclose confidential information or approve fraudulent transfers themselves.

This shift means organizations must strengthen identity verification, customer authentication, and behavioural monitoring rather than relying solely on perimeter security.

E-commerce Creates More Fraud Opportunities

The continued growth of online shopping has increased the volume of digital transactions processed every day. Higher transaction volumes naturally create more opportunities for fraudulent payments, identity theft, and account compromise.

Online merchants may encounter:

• Payment card fraud

• Refund fraud

• Fake customer identities

• Account takeover

• Merchant impersonation

Businesses processing large numbers of online payments therefore need effective transaction monitoring systems capable of identifying unusual payment behaviour without disrupting legitimate customer activity.

Social Engineering Remains Highly Effective

Modern payment fraud often depends more on psychology than technology.

Instead of attempting to hack secure banking infrastructure, criminals manipulate employees into making legitimate payments to fraudulent accounts.

Common examples include:

• CEO fraud

• Fake supplier requests

• Urgent payment instructions

• Invoice manipulation

• Business email compromise (BEC)

These attacks frequently exploit trust, urgency, and authority rather than technical vulnerabilities.

The French government regularly advises businesses through Service-Public.fr to independently verify requests involving changes to supplier bank details or urgent payment instructions, particularly when received by email.

Identity Theft Increases Financial Crime Risk

Identity theft remains a significant enabler of payment fraud.

Criminals use stolen or fabricated identities to:

• Open bank accounts

• Circumvent customer verification

• Apply for financial products

• Conduct fraudulent transactions

• Recruit money mules

Because identity fraud often precedes both payment fraud and money laundering, customer due diligence plays a central role in preventing financial crime.

Organizations processing personal information must also comply with data protection requirements. The CNIL provides guidance on protecting personal data and reducing identity theft risks through appropriate security measures and governance.

Business Email Compromise Targets Every Sector

Business Email Compromise (BEC) continues to affect organizations across France regardless of their size or industry.

Attackers may impersonate:

• Chief executives

• Finance directors

• Suppliers

• Lawyers

• Business partners

Their objective is simple: convince an employee to authorize a payment before verification procedures can be completed.

These attacks are particularly dangerous because the payment itself appears legitimate, making traditional fraud detection methods less effective.

Artificial Intelligence Is Changing Fraud Techniques

Artificial intelligence has made fraudulent communications significantly more convincing.

Criminals increasingly use AI tools to generate:

• Highly personalized phishing emails

• Fake invoices

• Realistic voice cloning

• Professional business correspondence

• Automated social engineering campaigns

Rather than replacing traditional fraud methods, AI enhances existing scams by making fraudulent communications harder to distinguish from legitimate requests.

This development increases the importance of employee awareness, layered verification procedures, and continuous transaction monitoring.

France and Europe Continue to Strengthen Fraud Prevention

French and European authorities continue to strengthen measures aimed at reducing payment fraud across the financial sector.

The European Commission's Retail Payments Strategy encourages safer digital payments while supporting innovation and consumer confidence.

Similarly, DG Trésor highlights the importance of effective AML frameworks, fraud risk management, and regulatory cooperation in protecting the integrity of France's financial system.

According to the European Central Bank's report on payment fraud, payment fraud continues to evolve alongside digital payment technologies, reinforcing the need for stronger authentication measures, improved fraud detection, and closer cooperation between financial institutions and supervisory authorities.

The combination of faster payments, increasingly sophisticated social engineering, AI-enabled deception, and identity fraud means organizations can no longer treat fraud prevention as a standalone function. Instead, it must be integrated into broader AML compliance, customer due diligence, and risk management programmes.

Common Types of Payment Fraud in France

Organizations operating in France face a wide range of payment fraud schemes, many of which generate proceeds that later become part of money laundering activity. While the techniques vary, most rely on deception, compromised identities, or weaknesses in payment approval processes. Understanding these fraud typologies helps businesses strengthen internal controls, improve transaction monitoring, and identify suspicious activity before financial losses occur.

Authorized Push Payment fraud has become one of the fastest-growing payment fraud risks because victims unknowingly authorize the transaction themselves. Unlike unauthorized card fraud, these payments often bypass traditional security controls, making preventive verification procedures particularly important.

Business email compromise, CEO fraud, and invoice fraud also continue to affect French businesses across multiple sectors. These attacks typically rely on impersonation rather than technical system breaches, highlighting the importance of strong internal approval processes and employee awareness.

Identity fraud remains another significant concern because it allows criminals to establish accounts using stolen or fabricated personal information. Once fraudulent identities enter the financial system, they may be used to facilitate payment fraud, money mule activity, and money laundering.

French public authorities encourage organizations to verify supplier information carefully and remain alert to fraudulent payment requests. Guidance published by Service-Public.fr recommends independently confirming any request to change banking details or authorize unusual transfers before processing payments.

Although each fraud type presents unique challenges, Authorized Push Payment fraud, account takeover, identity fraud, business email compromise, and money mule schemes currently represent some of the highest payment fraud risks for organizations operating in France.

Understanding these threats is only the first step. The next section explains how AML compliance controls help organizations detect, prevent, and respond to payment fraud before significant losses occur.

How AML Compliance Helps Prevent Payment Fraud

Payment fraud prevention is most effective when it forms part of a broader Anti-Money Laundering (AML) compliance framework. While fraud prevention focuses on stopping unauthorized or deceptive transactions, AML controls help identify suspicious financial activity, prevent criminals from exploiting the financial system, and ensure businesses meet their legal obligations.

In France, regulated entities are expected to adopt a risk-based approach that combines customer due diligence, transaction monitoring, employee awareness, and suspicious transaction reporting. These controls not only reduce the likelihood of fraud but also help organizations detect criminal networks attempting to launder fraud proceeds.

The European Banking Authority's AML and Counter-Terrorist Financing guidance emphasizes that firms should integrate fraud indicators into their broader AML risk management framework. Similarly, the ACPR's guidance on combating money laundering and terrorist financing expects supervised institutions to maintain effective systems for identifying suspicious customer behaviour and unusual transactions.

Customer Due Diligence (CDD)

Customer Due Diligence (CDD) is one of the first lines of defence against payment fraud. Rather than simply collecting customer information during onboarding, effective CDD helps organizations determine whether a customer presents an elevated fraud or money laundering risk.

CDD supports payment fraud prevention by enabling businesses to:

• Verify the identity of customers before establishing a business relationship.

• Understand the purpose and nature of the relationship.

• Assess expected transaction behaviour.

• Identify inconsistencies that may indicate identity fraud or account misuse.

• Update customer information when risk profiles change.

For example, if a newly onboarded corporate customer immediately begins making unusually large international payments that are inconsistent with its stated business activities, CDD information provides valuable context for determining whether further investigation is required.

CDD also helps detect fraud involving stolen or synthetic identities before criminals gain access to payment services.

Know Your Customer (KYC)

Know Your Customer (KYC) procedures build upon customer due diligence by ensuring organizations maintain confidence in who they are dealing with throughout the customer relationship.

Strong KYC controls reduce payment fraud by preventing criminals from opening accounts using false identities or compromised documents.

Effective KYC programmes typically include:

• Identity verification using reliable documentation.

• Verification of beneficial ownership for legal entities.

• Ongoing customer profile reviews.

• Screening against sanctions and politically exposed person (PEP) lists where required.

• Secure record keeping.

KYC also supports fraud investigations. When suspicious payments occur, accurate customer records allow compliance teams to quickly determine whether the transaction aligns with the customer's normal behaviour or whether additional enquiries are necessary.

The European Banking Authority recommends applying KYC measures proportionately according to the customer's risk profile while maintaining ongoing monitoring throughout the business relationship.

Enhanced Due Diligence (EDD)

Not all customers present the same level of risk. Enhanced Due Diligence (EDD) applies additional scrutiny where higher fraud or money laundering risks exist.

EDD may be appropriate for:

• High-risk business sectors.

• Complex corporate ownership structures.

• Cross-border business relationships.

• Customers with unusually high transaction volumes.

• Situations involving elevated fraud indicators.

Additional measures may include obtaining more detailed information about the customer's business activities, verifying the source of funds, identifying the source of wealth where appropriate, and increasing the frequency of ongoing monitoring.

Enhanced scrutiny makes it more difficult for organized criminal groups to use legitimate financial institutions to move fraud proceeds without detection.

Transaction Monitoring

Transaction monitoring is one of the most effective tools for identifying payment fraud before significant losses occur.

Rather than reviewing individual transactions in isolation, monitoring systems analyse payment activity over time to identify unusual patterns, behavioural changes, or transactions that fall outside a customer's expected profile.

Examples of payment fraud indicators include:

• Multiple payments to newly added beneficiaries.

• Sudden increases in transaction values.

• Payments made outside normal business hours.

• Numerous failed login attempts followed by successful high-value transfers.

• Frequent changes to beneficiary account details.

• Rapid movement of incoming funds to other accounts.

Modern transaction monitoring combines automated detection rules with human analysis. Alerts should be reviewed promptly by trained compliance personnel who understand both fraud risks and AML obligations.

The Joint ACPR and TRACFIN Guidelines on Customer Due Diligence Obligations encourage firms to develop monitoring systems capable of identifying unusual or suspicious financial activity based on customer risk.

Effective monitoring also reduces false positives by incorporating customer risk profiles, expected transaction behaviour, and contextual information into alert generation.

Suspicious Transaction Reporting (TRACFIN)

When a business identifies activity that may involve fraud, money laundering, or terrorist financing, it may have reporting obligations under French AML legislation.

TRACFIN, France's Financial Intelligence Unit (FIU), receives and analyses suspicious transaction reports submitted by entities subject to AML requirements.

A suspicious transaction report (STR) may be appropriate when there is reasonable suspicion that funds are linked to criminal activity or when a transaction lacks an apparent lawful purpose.

Examples include:

• Payments inconsistent with the customer's known business activities.

• Transactions involving suspected money mule accounts.

• Repeated attempts to avoid internal controls.

• Complex payment structures without a clear commercial rationale.

• Evidence suggesting fraud proceeds are being layered through multiple accounts.

Submitting a report does not mean fraud has been proven. Rather, it allows TRACFIN to analyse the information alongside intelligence from other reporting entities.

The official TRACFIN guidance explains reporting obligations and provides practical information for professionals subject to French AML requirements.

Organizations should also maintain internal procedures for documenting decisions, preserving evidence, and escalating suspicious activity appropriately.

Employee AML Training

Technology alone cannot prevent payment fraud. Employees remain one of the most important controls within any AML programme.

Finance staff, customer service teams, relationship managers, compliance officers, and senior management all play a role in identifying suspicious activity.

Effective AML training helps employees:

• Recognize common payment fraud schemes.

• Identify social engineering attempts.

• Verify unusual payment requests.

• Escalate suspicious behaviour promptly.

• Understand reporting obligations.

• Apply internal fraud prevention procedures consistently.

Training should reflect the organization's risk profile rather than relying solely on generic compliance material. Employees responsible for approving payments, onboarding customers, or reviewing transactions often require more detailed fraud-specific instruction.

Regular refresher training also helps organizations respond to evolving fraud techniques, including AI-assisted phishing and increasingly sophisticated impersonation attacks.

Risk-Based Approach

French AML legislation and European regulatory guidance are built around the principle of a risk-based approach.

Rather than applying identical controls to every customer or transaction, organizations should allocate compliance resources according to the level of risk presented.

A comprehensive fraud risk assessment considers factors such as:

• Customer type.

• Products and services.

• Transaction values.

• Delivery channels.

• Geographic exposure.

• Historical fraud trends.

• Emerging criminal typologies.

Businesses can then tailor due diligence, monitoring intensity, approval procedures, and escalation processes to reflect those risks.

For example, a low-risk domestic customer making routine payments may require standard monitoring, while a newly onboarded corporate client conducting complex cross-border transactions may warrant enhanced due diligence and closer transaction review.

This approach enables organizations to focus resources where they are most effective while maintaining compliance with French AML obligations.

Ultimately, AML compliance does far more than satisfy regulatory requirements. When properly implemented, it provides a structured framework for detecting payment fraud early, protecting customers, reducing financial losses, and preventing criminal proceeds from entering the legitimate financial system.

French Regulations That Support Payment Fraud Prevention

Payment fraud prevention in France is supported by a combination of national legislation and European Union regulations. Together, these rules require regulated businesses to identify customers, monitor transactions, report suspicious activity, and implement appropriate security measures to reduce financial crime.

For banks, payment institutions, electronic money institutions, fintech companies, and other entities subject to Anti-Money Laundering (AML) obligations, understanding the legal framework is essential. Compliance is not limited to preventing fraud. Organizations must also demonstrate that they have effective governance, internal controls, and risk management processes.

The following regulations form the foundation of payment fraud prevention and AML compliance in France.

Code Monétaire et Financier

The French Code Monétaire et Financier provides the legal basis for France's AML and counter-terrorist financing framework. It incorporates many of the requirements introduced through European AML Directives and establishes obligations for regulated professionals.

Under the Code Monétaire et Financier, businesses subject to AML rules must:

• Identify and verify customers before entering into a business relationship.

• Identify beneficial owners where applicable.

• Apply customer due diligence according to the level of risk.

• Monitor business relationships on an ongoing basis.

• Maintain records of customer information and transactions.

• Report suspicious activity to TRACFIN when required.

These obligations help reduce opportunities for criminals to use legitimate businesses to facilitate payment fraud or launder illicit proceeds.

The official Code Monétaire et Financier on Légifrance provides the current legal provisions governing financial services and AML obligations in France.

TRACFIN Reporting Obligations

TRACFIN, France's Financial Intelligence Unit (FIU), plays a central role in detecting and disrupting financial crime. It receives suspicious transaction reports (STRs), analyses financial intelligence, and shares relevant information with competent authorities where appropriate.

Businesses subject to AML obligations must establish internal procedures for identifying and escalating suspicious activity. A report should be considered when there is reasonable suspicion that funds may be linked to criminal activity, including payment fraud or money laundering.

Examples of situations that may warrant internal investigation include:

• Payments that are inconsistent with the customer's known business activities.

• Repeated transfers to newly created beneficiary accounts.

• Unusual transaction patterns with no apparent economic purpose.

• Attempts to avoid customer verification procedures.

• Activity suggesting the use of money mule accounts.

Submitting a report does not require proof that a criminal offence has occurred. Instead, organizations should assess the available information and determine whether the circumstances create sufficient suspicion under the applicable legal framework.

The official TRACFIN guidance provides practical information on reporting obligations, risk indicators, and compliance expectations for reporting entities.

ACPR Supervision

The Autorité de Contrôle Prudentiel et de Résolution (ACPR) supervises banks, insurance companies, payment institutions, and other regulated financial entities operating in France.

In addition to prudential supervision, the ACPR assesses whether firms have effective systems for preventing money laundering and terrorist financing.

During supervisory reviews, the ACPR may evaluate whether an organization has:

• An enterprise-wide AML and fraud risk assessment.

• Appropriate governance and compliance oversight.

• Effective customer due diligence procedures.

• Reliable transaction monitoring systems.

• Internal reporting and escalation processes.

• Independent compliance testing or internal audit.

• Ongoing employee AML training.

The ACPR expects organizations to adopt a risk-based approach rather than relying solely on standardized controls. Firms should regularly review their fraud risks, update internal policies, and ensure that compliance programmes evolve alongside emerging payment fraud techniques.

The ACPR's AML supervision resources provide guidance, recommendations, and publications for supervised institutions.

PSD2 and Strong Customer Authentication (SCA)

The Second Payment Services Directive (PSD2) has significantly strengthened payment security across the European Union.

One of its most important fraud prevention measures is Strong Customer Authentication (SCA), which generally requires payment service providers to verify customer identity using at least two independent authentication factors based on:

• Something the customer knows, such as a password or PIN.

• Something the customer possesses, such as a mobile device or security token.

• Something the customer is, such as biometric authentication.

By requiring multiple authentication factors, SCA reduces the likelihood of unauthorized account access and fraudulent electronic payments.

PSD2 also promotes secure communication between payment service providers while encouraging innovation within the European payments market.

The European Commission's PSD2 information page explains the objectives of the Directive and its implementation across EU Member States.

EU AML Package

The European Union has introduced a comprehensive legislative package designed to strengthen AML and counter-terrorist financing controls across Member States.

The package aims to create greater consistency in how AML requirements are applied while improving cooperation between national supervisors and Financial Intelligence Units.

Key elements include:

• A directly applicable EU Anti-Money Laundering Regulation (AMLR).

• A new Anti-Money Laundering Directive (AMLD6).

• The establishment of the Anti-Money Laundering Authority (AMLA).

• Enhanced customer due diligence requirements.

• Improved beneficial ownership transparency.

• Stronger cooperation between national competent authorities.

For French organizations, these developments reinforce the importance of maintaining robust AML governance, fraud prevention measures, and effective risk management processes.

Businesses should monitor regulatory developments to ensure that internal compliance programmes remain aligned with evolving European requirements.

The European Commission's Anti-Money Laundering package provides updates on the implementation of the new framework, while the EUR-Lex database offers access to the official legislative texts.

France's regulatory framework makes it clear that payment fraud prevention is not solely an operational responsibility. It is a compliance obligation supported by customer due diligence, governance, transaction monitoring, reporting, and strong authentication requirements.

Understanding these legal obligations is only part of an effective compliance programme. Organizations must also recognize the warning signs of fraudulent activity before losses occur.

Payment Fraud Red Flags Businesses Should Never Ignore

No single indicator confirms that payment fraud or money laundering is taking place. Legitimate customers may occasionally display unusual behaviour for valid commercial reasons. However, when multiple warning signs appear together or become part of a recurring pattern, they should prompt further review.

Compliance teams should combine automated transaction monitoring with human judgement to assess whether unusual payment activity warrants additional investigation or escalation.

The following table highlights common payment fraud red flags that businesses in France should never ignore.

These indicators should never be assessed in isolation. A single unusual transaction may have a legitimate explanation, particularly for customers with changing business needs or seasonal payment patterns.

Instead, organizations should evaluate the broader context, including the customer's expected behaviour, transaction history, business profile, and overall risk rating. A combination of several red flags often provides a much stronger basis for investigation than any single indicator alone.

Effective payment fraud prevention therefore depends on integrating red flag monitoring into broader AML controls, customer due diligence, and transaction monitoring processes. Early detection allows businesses to intervene before fraudulent payments are completed or criminal proceeds enter the wider financial system.

Best Practices for Preventing Payment Fraud

No single control can eliminate payment fraud. Criminals continuously adapt their techniques, combining social engineering, identity theft, and compromised payment credentials to bypass traditional safeguards. The most effective defence is a layered strategy that combines governance, technology, employee awareness, and ongoing monitoring.

The following best practices can help French businesses strengthen their payment fraud prevention framework while supporting broader AML compliance.

Conduct Regular Fraud Risk Assessments

A fraud risk assessment helps organizations identify where payment processes are most vulnerable. It should consider factors such as payment channels, customer types, products and services, transaction volumes, and emerging fraud trends.

Risk assessments should not be treated as a one-time exercise. Businesses should review them periodically and after significant operational changes, such as launching new payment services or expanding into new markets.

The European Banking Authority's guidance on ML/TF risk factors encourages firms to adopt a risk-based approach when designing AML and fraud controls.

Verify Suppliers Before Making Payments

Supplier fraud and invoice fraud remain among the most common payment scams affecting businesses.

Organizations should establish procedures to:

• Independently verify changes to supplier bank account details.

• Confirm payment instructions using a trusted communication channel.

• Validate new suppliers before processing payments.

• Review supporting documentation for unusual invoices.

Simple verification steps can prevent substantial financial losses resulting from fraudulent payment requests.

Implement Multi-Factor Authentication (MFA)

Multi-factor authentication adds an additional layer of protection by requiring users to verify their identity using more than one authentication factor.

MFA helps reduce the risk of:

• Account takeover.

• Stolen password misuse.

• Unauthorized access to payment systems.

• Credential-based attacks.

Administrative accounts, payment approval systems, and remote access solutions should all be protected by strong authentication measures.

Apply Strong Customer Authentication (SCA)

For payment service providers and businesses subject to PSD2 requirements, Strong Customer Authentication (SCA) provides additional protection for electronic payments.

SCA requires independent authentication factors, making it significantly more difficult for criminals to authorize fraudulent transactions using compromised credentials alone.

Organizations should ensure that payment processes comply with applicable PSD2 requirements while balancing security with customer experience.

Require Dual Approval for High-Value Payments

Many successful fraud schemes rely on a single employee authorizing a payment without independent review.

Dual approval procedures require two authorized individuals to approve high-value or high-risk transactions before funds are released.

Businesses should consider applying dual authorization to:

• Large supplier payments.

• New beneficiaries.

• International transfers.

• Changes to payment instructions.

• Exceptional or urgent transactions.

Segregation of duties reduces the likelihood that fraudulent requests will bypass internal controls.

Strengthen Employee Awareness

Employees remain one of the strongest defences against payment fraud.

Regular training should help staff recognize:

• Phishing emails.

• CEO fraud.

• Business email compromise.

• Invoice manipulation.

• Social engineering techniques.

• Identity fraud indicators.

Training should include practical scenarios relevant to employees' responsibilities, particularly those involved in finance, procurement, customer onboarding, and payment approvals.

Perform Independent Internal Audits

Internal audits provide assurance that fraud prevention controls are operating as intended.

Audit programmes should evaluate:

• Compliance with payment approval procedures.

• Customer due diligence processes.

• Transaction monitoring effectiveness.

• Access controls.

• Incident reporting.

• Record keeping.

Audit findings should be incorporated into continuous improvement plans to strengthen fraud prevention over time.

Develop an Incident Response Plan

Even organizations with mature controls may experience attempted fraud.

A documented incident response plan enables teams to react quickly by defining:

• Roles and responsibilities.

• Escalation procedures.

• Communication protocols.

• Evidence preservation.

• Regulatory reporting requirements.

• Post-incident reviews.

Rapid response can reduce financial losses and support timely compliance with reporting obligations where applicable.

Continuously Monitor Payment Activity

Fraud risks evolve constantly. Organizations should regularly review transaction monitoring rules, update fraud indicators, and assess emerging criminal techniques.

Continuous monitoring enables compliance teams to detect unusual behaviour before it develops into larger financial losses.

Combining technology with experienced analysts helps organizations distinguish genuine customer activity from suspicious payment patterns while reducing unnecessary false positives.

By integrating these practices into everyday operations, French businesses can strengthen both payment fraud prevention and AML compliance, reducing financial crime risks while supporting regulatory expectations.

Case Study: Preventing a Payment Fraud Attempt at a French Manufacturing Company

Background

Alpine Industrie SAS is a fictional medium-sized manufacturing company based in Lyon. The business processes hundreds of supplier payments each month and maintains long-term relationships with both domestic and international vendors.

To strengthen its compliance programme, the company implemented customer due diligence for new suppliers, dual payment approvals, transaction monitoring, and mandatory fraud awareness training for finance staff.

Fraud Attempt

A member of the finance department received an email appearing to come from a long-standing supplier. The message explained that the supplier had changed its banking provider and requested that all future payments be sent to a new account.

The email included a professional-looking invoice, accurate branding, and language consistent with previous correspondence.

Detection

Before updating the supplier's banking details, the finance employee followed internal verification procedures and contacted the supplier using an existing telephone number already recorded in the company's supplier database.

The supplier confirmed that no bank account change had been requested.

The email had been sent from a domain name closely resembling the supplier's legitimate address, indicating an attempted business email compromise and invoice fraud scheme.

AML Controls Applied

The company successfully prevented financial loss because several controls worked together:

• Supplier verification procedures identified the inconsistency.

• Dual approval requirements prevented immediate payment.

• Employee awareness training encouraged independent verification.

• Internal escalation procedures ensured the incident was reported promptly.

• Transaction monitoring confirmed that no payments had been processed to the fraudulent account.

Outcome

No fraudulent payment was made, and the organization reviewed similar supplier accounts to determine whether additional attempts had occurred.

The incident also prompted updates to employee training materials and strengthened procedures for verifying banking detail changes.

Lessons Learned

This example demonstrates that payment fraud prevention does not depend on a single control. Layering supplier verification, employee awareness, payment approvals, and AML governance creates multiple opportunities to detect fraudulent activity before funds leave the organization.

Conclusion

Payment fraud continues to evolve as businesses embrace digital banking, instant payments, and increasingly connected financial services. While these innovations improve efficiency, they also create new opportunities for organized criminals to exploit weaknesses in payment processes and customer verification.

An effective payment fraud France strategy goes beyond detecting suspicious transactions. It combines customer due diligence, Know Your Customer procedures, transaction monitoring, employee awareness, fraud risk assessments, and strong governance within a comprehensive AML compliance framework.

French regulations, supported by the Code Monétaire et Financier, TRACFIN reporting obligations, ACPR supervision, PSD2 security requirements, and the evolving EU AML framework, require organizations to take a proactive approach to preventing financial crime. Businesses that regularly review their risks, strengthen internal controls, and respond quickly to emerging fraud threats are better positioned to protect both their customers and their reputation.

As payment technologies continue to evolve, organizations should view fraud prevention as an ongoing process rather than a one-time compliance exercise. Continuous improvement, informed by regulatory guidance and emerging fraud trends, remains essential for reducing financial crime risk in France.

Strengthen Your Anti Financial Crime Knowledge

Preventing payment fraud requires more than understanding individual fraud schemes. Compliance professionals also need practical knowledge of AML obligations, customer due diligence, transaction monitoring, fraud detection, risk assessment, and French regulatory expectations.

The Anti Financial Crime Training from the French Compliance Institute provides a structured introduction to these topics, helping compliance officers, AML analysts, financial institutions, fintech professionals, and risk managers strengthen their understanding of anti-financial crime controls within the French regulatory environment.