UK financial crime decision-makers are struggling to keep pace with AI-enabled fraud. New research from The Payments Association finds that 76% of those who have encountered it say the threat is growing faster than their organisation can respond, the largest perceived response gap of any financial crime risk the research examined.

The finding comes from The Payments Association’s Financial Crime 2026 Pulse report, published 31 July 2026 and based on a survey of 100 senior UK financial services decision-makers across financial crime, fraud, risk and compliance functions.

Fraud losses are already rising sharply

The response gap sits on a fraud problem that is already growing. UK Finance’s Annual Fraud Report 2026, published in June, put total payment fraud losses at £1.28 billion in 2025, up 4% year on year.

Authorised push payment fraud, in which a criminal tricks a victim into knowingly sending money, rose faster still: losses reached £576.4 million across 248,070 cases, up 19% and 7% respectively. Investment fraud losses within that total climbed 40%, to £221.5 million.

Ruth Ray, managing director of economic crime at UK Finance, said fraud “operates on an industrial scale, harming people, businesses and the UK economy, typically funding serious and organised crime in the UK and globally.”

Regulation has moved, but the gap remains

Payment firms have been required to reimburse most APP fraud victims since the Payment Systems Regulator’s mandatory reimbursement rules took effect on 7 October 2024, capped at £85,000 per claim and with a five-business-day turnaround target.

The PSR’s own dashboard says that in the 18 months from 7 October 2024 to 31 March 2026, firms reimbursed 88% (£316m) of money lost to in-scope APP scams. The dashboard also cites a 61% reimbursement rate from UK Finance’s 2024 personal-account data, while noting that the two figures are not directly comparable because of differences in scope and methodology.

APP fraud rated the sharpest threat, though not the most common

Despite that regulatory response, APP fraud isn’t the most commonly experienced form of financial crime in the Payments Association’s survey. Insider fraud is more widespread, reported by 78% of respondents, though only 35% call it a major challenge.

Even so, 51% of financial crime decision-makers rate APP fraud as their firm’s most severe challenge, the highest severity score of any risk in the research.

Emma Banymandhub, chief executive of The Payments Association, said: “While 73% rate data-sharing limitations as a major or moderate challenge, only eight of the 37 respondents who describe it as a major challenge are investing in the infrastructure needed to address it. That gap should concern the entire industry.”

Investment plans lag the risk

Despite the pace of AI-enabled fraud, only half of respondents say AI fraud prevention is among their organisation’s investment priorities for the next year. Forty-one per cent say AI governance is the area of financial crime that most lacks practical implementation guidance, ahead of crypto compliance at 37%.

Banymandhub added: “Our findings show just how quickly AI-enabled fraud is evolving, while exposure to financial crime has become almost universal across the sector. As fraudsters become more sophisticated, organisations must work together to strengthen prevention, improve intelligence sharing and respond more quickly to emerging threats.”

The survey also finds the pressure lands differently by firm type. Banks are more likely to name digital identity and know-your-customer weaknesses as their most significant risk (63%), while fintechs are more likely to name fraud prevention itself as their leading source of operational uncertainty.

The Payments Association will discuss the findings at its Financial Crime 360 conference on 2 November 2026, where industry leaders, regulators and technology providers are due to examine the challenges the report raises.