Escaping the Financial Crime Pandemic

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The financial crime landscape as we emerge from Covid is looking far worse than that following the financial crisis of 2008, add to that the current approach being undertaken by Law Enforcement & Government, it feels as though we are being completely swamped and its only getting worse.

This may come as a surprise to many as the Prime Minister has appointed John Penrose MP as his Anti-Corruption champion, but it doesn’t seem to have had any effect. The government need to take responsibility & set up dedicated resource to address the ongoing issues as David Clarke Fraud Advisory Panel Chair recently stated

“We are in a real pickle – there is no ownership and accountability, we would love to see a real deep look at this and have a minister accountable for economic crime,” he told MPs on the Treasury Select Committee.

Lets try to understand why we are in this situation, is it solely due to Covid, how long has it been going on & why has it been allowed to get this bad?

There is no denying Covid has had a large impact on Fraud, many were furloughed or even worse, made redundant, with a distinct lack of other opportunities. Desperate times call for desperate measures & people found themselves needing to keep a roof over their head & feed their family, this is blatantly obvious when we walk into supermarkets & see the large donations for food banks, will rations follow? For many this seemed an impossible task & the opportunity to commit fraud became apparent & very little was done to prevent it, only now are we realising the size of the loss but more importantly the task to try and recoup that money, is monumental!

Prior to Covid the UK has for a long time now been seen as the ‘ML’ capital of the world & again very little is being done to address the issues, its widely accepted the number of transactions makes it difficult but ultimately, we seem to encourage those transactions. London is a global financial centre, but we are not stepping up to the task. Helena Wood an expert from the Royal United Services Institute, (RUSI) said “With great size comes great responsibility, the main thing we can particularly learn from the United States is that they accept the responsibility of having a large financial centre and they respond to the risk accordingly, but nobody really fears the Financial Conduct Authority (FCA) globally, but they really fear the regulators in the States because they’re taking a much more robust approach”

So its widely recognised we are a soft target for Financial Crime but the Government & Regulators aren’t doing enough to discourage it or prevent the UK from this tarnished reputation we currently hold. What can be done, I hear you ask, let us look at the Suspicious Activity Reporting (SARs), unfortunately it seems the volume of transactions has outgrown the current method and a review is needed urgently to ensure the reporting of such incidents is made easier & there is a joined up approach in processing the volume of reports made, as opposed to currently, whereby organisations in the regulated Sector are required under Part 7 of the Proceeds of Crime Act (POCA) to report any suspicious transaction and many organisations report multiple suspicions on a daily basis, but despite this, many payments are still being made, which is disheartening for those financial institutions and other professionals including; solicitors, accountants and estate agents as SARs are a  vital source of intelligence, not only in respect of economic crime but on a wider assortment of criminal activity.

Along the lines of reporting is the ‘OxyMoron’ that is Action Fraud, following the same pattern as the SARs regime we are all encouraged to report all Fraud related crimes to Action Fraud but it feels as though nothing is done, we make reports and they disappear into a cavernous black hole & nothing is heard thereafter, we know it happens but similar to SARs reporting, I sympathise as there is too much data for the respective systems to cope with.

I sympathise as similar to the potholes in our roads, the Romans never appreciated the volume of traffic that would use them hence they keep collapsing, Action Fraud is the only system out there and is the envy of many but nobody could ever imagine the volume of fraud that we now suffer in the UK, the new procurement contract is let & hopefully the new system & process will be more effective, my only caveat is it a 5 year contract with a potential 2 year extension. Whether 5 years or 7n I feel it’s too long & therefore we will be in the same position as we are now,? it would be better to reduce it to 3 years & then it can be rebuilt accordingly.