Solving Instant Payments Fraud with Effective Verification of Payee

Instant payments are transforming treasury operations for the better. Yet, their immediacy and irrevocable nature raises significant fraud concerns. In Europe, instant credit transfers already experience much higher fraud rates than regular credit transfers. And now, with the rise of AI and deepfakes, the fraud threat is compounding.

To address fraud concerns, it is crucial to verify the payee's identity and confirm that the bank account belongs to the legitimate entity claiming ownership before the payment is executed. This has been reflected in the EU’s Instant Payment Regulation (IPR), which mandates that by October 09 2025, all Eurozone payment service providers verify a payee's name against their international bank account number (IBAN) before processing transactions. This is known variably as Verification of Payee, Confirmation of Payee, or IBAN Name Check .

While this marks progress, matching a name to an account is not infallible. The fragmentation created by the lack of a globally consistent identifier for payees across borders means that similar or misspelled names often trigger "close match" errors. For treasurers, these require time-consuming manual interventions that create opportunities for fraudsters to exploit human error.

There is an answer to this challenge that can enable fast, accurate, and automated payee verification – the Legal Entity Identifier (LEI).

The LEI Advantage: Clarity, Security, and Scale

Unlike national registration numbers, the LEI provides a global standard for identifying legal entities. With an LEI, anyone, anywhere, can cross-reference who an organization claims to be against a legitimate and verified data source. This unique ability has been recognized in the IPR.  

Beyond short-term compliance requirements, integrating LEIs into the payee verification process unlocks several benefits. Close matches are eliminated, enabling  ‘straight-through processing’ and reducing fraud. More broadly, it streamlines cross-border payments and supports regulatory compliance.

Now is the time for corporate treasurers, solution providers, and banks to embrace the LEI as a core building block of modern treasury operations. The good news is that with the IPR deadline looming, LEI adoption is straightforward, and the benefits are immediate.

François Masquelier, Chair of the European Association of Corporate Treasurers (EACT) explores this topic in more detail here.