Recent months have seen movement from the UK authorities to try to address the serious problem of financial crime. Our latest report on the subject, ‘The financial cost of fraud 2021’ shows that the cost to UK businesses and individuals now runs at some £137 billion. With the latest ONS data showing that between March 2020 and March this year there was a 26.3% increase in incidents of fraud and a staggering 99.7% increase in cybercrime, what more incentive could be needed for action to be taken?
The ‘Beating Crime Plan’
On 27 July 2021 the UK Government published its action plan to cut crime. The ‘Beating Crime Plan’ received much media attention, although most of this focussed on there being a named officer for every victim of crime, “chain gangs” as punishment for anti-social behaviour and, league tables for police forces to rank how quickly they answer calls for assistance. However, aspects of the plan designed to counter fraud and cybercrime were not widely reported.
The plan proposes that the national body responsible for receiving reports of fraud, Action Fraud, is scrapped. Many commentators would argue that this is about time, with user feedback from the service describing it as “pointless”, “a waste of time” and with a complete absence of updating and contact. The replacement is vaunted to be an “improved” national fraud and cybercrime reporting system, increasing the intelligence capabilities in the National Crime Agency (NCA) and the national security community. How this will also improve the experience of victims and those who report fraud is unclear but to fail to do so will mean that the system is flawed from the outset.
What other proposals are in place to tackle fraud and cybercrime?
- Measures in the Online Safety Bill to require tech companies to tackle fraud, giving firms the responsibility of protecting users from fraud.
- Increasing law enforcement investigative activity within the City of London Police (the lead force for fraud) and in Regional Organised Crime Units.
- Creating a new fraud investigative function within the NCA to target the most serious and complex frauds and fraudsters.
- Improving the experience of fraud victims.
Why is financial crime a problem in the UK?
A report by parliament’s Intelligence and Security Committee, found that the UK “offered ideal mechanisms by which illicit financial finance could be recycled through what has been referred to as the London ‘laundromat’”. The gatekeeper of the UK’s anti-money laundering regime is known as the ‘regulated sector’ – the lawyers, accountants, banks, casinos, money-change bureaus and high-value dealers whose services may be targeted by criminals to launder the proceeds of crime. The Money Laundering Regulations place a burden on the regulated sector to report suspicions of money laundering to the National Crime Agency in the form of a Suspicious Activity Report, commonly referred to as ‘SARs’. Failure to report a suspicion is a criminal offence under the Proceeds of Crime Act but prior to this year there have been relatively few, if any, such prosecutions. This changed in June this year, when self-styled money laundering expert Dominic Thorncroft was convicted of failing to notify the authorities of suspicions of money laundering. Earlier the same month the Crime Prosecution Service (CPS) updated its guidance and policy on prosecuting those working in the regulated sector for failing to submit a Suspicious Activity Report (SAR). It indicates that prosecutions are more likely to take place in cases where there was insufficient evidence to establish that money laundering was planned or has taken place, something that would not have happened previously. Given that over 94% of SARs emanated from banks and other financial institutions in 2019/20, its clear that the CPS feels that others in the regulated sector need to do more to combat money laundering.
How we can help
If you would like further information on how your company can reduce its exposure to fraud or to ensure that it is doing all it can to identify suspicions of money laundering, please contact Jim Gee.
