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Lucy Frew contributes to Lexology and Global Investigations Review article exploring a new category of financial crime

Sep 3, 2025

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Pig butchering study: Are banks prepared for this unchartered territory?

This piece was first written for Global Investigations Review and Lexology, contributed to by our partner Lucy Frew.

Banks whose customers have fallen victim to a practice known as 'pig butchering' could be on the hook for failing to protect them. Experts are warning that financial institutions must have technology-enabled romance fraud on their compliance checklists.

The explosion of pig butchering schemes – in which online scammers assume false identities to build connections with their victims before duping them into transferring large amounts of money into sham investments – has created a host of new compliance issues for banks. It has put them on the hook for compensation claims worth an estimated $75 billion per year in losses, according to a study published on 4 August by corporate intelligence firm Aperio.

Charles Hollis, a former UK diplomat posted in Iraq, Saudi Arabia, Iran and at the United Nations headquarters in New York, and now the head of strategic intelligence at Aperio, spoke to GIR ahead of the report’s release to explain how banks are facing 'a whole new category of financial crime'. A copy of the report was also shared with GIR.

'This is new and sinister and fast and could be very destabilising if it isn’t dealt with,' Hollis warned. 'It would undermine trust in the whole system. And it needs to be dealt with fast, because at present I don’t think the financial system is doing anything like enough to even recognise it, let alone respond to it.'

Hollis said a growing number of lawsuits in the US show that banks risk being held liable by duped customers if they don’t update their compliance programmes to account for customers falling victim to pig butchering. 

'There’s a risk of: ‘Why didn’t you do anything? Why weren’t you more aware? Why didn’t you put things in place?’,' Hollis said. 'And people will want answers and they’ll want redress eventually, so for their own protection both financially and in terms of trust and reputation, the banks need to face up to this.'

A banking expert who previously worked as an in-house counsel at Swiss bank UBS said financial institutions themselves are also at risk of falling prey to similar techniques used in pig butchering. Speaking in a video interview from her Cayman Islands office, Walkers partner Lucy Frew told GIR about a recent case she worked on where a fintech company almost fell victim to a sophisticated fraud scheme.

After a series of video calls with someone claiming to be platform’s deputy general counsel, the company believed it was in the process of onboarding with 'a very big, household-name exchange' – a process that helps fintechs achieve credibility with customers – which Frew said 'has historically been quite difficult'. The purported lawyer for the exchange eventually told the fintech company it needed to make a donation to a certain charity before the onboarding could be completed. 

When Frew and her colleagues were asked to look into the onboarding agreement, they realised immediately that something wasn’t quite right. 

'It was when they started to tell us about the background that we thought, ‘Hang on, are you sure that you’re dealing with who you thought you were dealing with?' said Frew.

She soon discovered that the 'deputy general counsel' the company had interviewed on a video call was a highly sophisticated deepfake. 

Though it wasn’t technically a romance fraud, Frew said the scheme relied on manipulating similar feelings of shame and desire. 'For them [the fintech] the emotional side was wanting to grow the business and succeed,' she explained. 

Growth of a criminal phenomenon

When criminal organisations in Southeast Asia began using the pig butchering technique in the early 2010s, their victims were mostly Chinese nationals, Hollis explained. But advances in technology, particularly cryptocurrencies and AI, combined with 'the rather hideous involvement of forced labour', have allowed pig butchering to become 'a kind of industrialised operation' with a global reach. 

Aperio cited a 2023 finding by the United Nations that at least 220,000 people have been trafficked into scam compounds across Southeast Asia where they are forced to conduct pig butchering scams. Two victims who escaped from one such trafficking operation in Myanmar recounted their experiences to Aperio. 

The escapees told the firm that the compound, which housed roughly 200 people, was surrounded by high walls and barbed wire and patrolled by armed guards. They said they worked 12-hour shifts 'at a desk with a computer and a variety of mobile phones and were tasked with following a specific series of scripts to contact and maintain a running dialogue with approximately 10 scam victims at a time,' who were primarily based in the US and the UK. Primary lines of communication included text messages and apps such as Facebook Messenger, WhatsApp, Line and Instagram, with scammers often using elaborate fake profiles to create a veneer of credibility. 

When their targets sought to have audio or video calls with the scammer, they were transferred to a separate room where other scammers used AI technology 'to assume the voice and visual representation of the persona they were portraying'. 

'Trafficking victims explained that their scripted outreach was often aimed at establishing a romantic rapport, sustaining communication before introducing the investment scheme generally with the cryptocurrency Tether,' Aperio said in the report. 

Frew said that the fact that many of the perpetrators of pig butchering are being trafficked adds a further layer of complexity to the issue. 'It’s not as easy as one might think to allocate blame here,' she said.

Extent of banks’ liability unclear

The banking lawyer also said the extent to which courts or regulators can hold banks liable when their customers fall victim to pig butchering is not yet clear. 

'I don’t think that the banks are generally to be held to blame for this particular type of scam,' Frew said. 'They do have to carry out their customers’ transactions, especially when the deceived customer has confirmed they should go ahead. We’ve experienced banks and financial institutions frequently querying and blocking anything that they think is suspicious.'
While the lawyer is seeing financial institutions agree to compensate customers over a range of fraud-related issues, she isn’t often seeing that when it comes to pig butchering.

'We do see banks compensating customers for certain types of fraud where perhaps the bank could have maybe done more in terms of their prevention and controls. But I think that for pig butchering, it is genuinely very difficult to see what banks can do to help other than just provide warnings to customers and encouraging them to raise concerns as early as possible and without fear or shame,' she added.

You can find the original publication on Lexology here or on Global Investigations Review here.

Regulatory & ComplianceCayman Islands

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