Written by Rob Tharle, Head of Product
In the last month we’ve had two linked publications, firstly the Progress Combating Fraud report by the House of Common Public Accounts committee (PAC) and then the a few weeks later the governments Economic Crime Plan. However, what is still missing is the governments long awaited fraud strategy, especially as fraud has been classed as a national security threat.
What are the key elements of these two publications?
The UK House of Commons Committee of Public accounts recently published its Progress combating fraud report. Firstly, let’s start with the PAC report which highlights the scope of the UK fraud issues:
- Circa 41% of all crime in UK is made up of fraud cases
- Fraud against individuals is estimated at £4.7bn per annum
- Less 1% of the c900k cases of fraud reported to Action Fraud (UK service to receive fraud reports) result in charge or prosecution
- 70% of cases involve and international dimension of some kind
It is fair to say the report, makes it very clear more can and should be done in the UK. The committees’ key points and recommendations are:
- Slow progress by government on fraud agenda and it should publish the fraud strategy ASAP
- The many public awareness campaigns on fraud not very recognisable by the public
- Actions Fraud is not able provide a judicial response to crime reports
- There is a lack of enforcement capabilities
- Criminal face a very small chance of being caught and low sentences when prosecuted
- Too much reliance on voluntary charters, rather than legislation
- Lack of international co-operation due to lack of resources and more effort should be put in place to work collaboratively with other jurisdictions
A couple of weeks later, we see, what is to an extend a response to this report, with the Economic Crime Plan 2. It starts with a huge statistic, that the level of laundered funds could be as high as £100bn in the UK each year!
The key points of the plan are:
- Reduce money laundering and recover more assets
- Drive down sanctions violations
- Cut fraud
These elements are to be achieved by:
- Increasing investigative resources by 445 over 3 years
- A new Public Private prioritisation approach
- Reform of supervisory regime
- New technology
- A number of other solutions around sanctions
In addition to this plan, the government has also published a new law, making it an offence, with an unlimited fine, for larger corporates to fail to prevent fraud at their firm. This is to cover elements such as where employees make false statements or false representation, among others, to benefit themselves. It is hoped this will add incentives to firms to increase controls and oversight to prevent abuse.
Do these elements go far enough to solve the issues outlined in part 1 of this blog and the PACs recommendations?
Whilst the Economic Crime Plan is a welcome step forward, there are issues here, namely, the lack of the promised Fraud Strategy and inadequate funding levels to make a meaningful difference. Likewise, the new failure to prevent fraud law should help, it does not over abuse of platforms by third parties.
When the Fraud Strategy is published, this may help to provide the much needed incentives throughout the fraud chain. However, without serious additional funding it is hard to see how the law enforcement and international elements mentioned by the PAC can be meaningfully achieved.
As I wrote in part 1, there are many more issues that just the banking part of the fraud chain, where additional incentives are required.
When considering the size of fraud out of all UK crimes, the impact on consumers, businesses and the government, along with the negative nature of the how fraud and other proceeds of crimes are used, it is clear more still needs to be done.