Fraud has emerged as a grave threat to the well-being, prosperity, and security of the UK. It currently accounts for over 40% of all offences in England and Wales, making it the most prevalent form of criminal activity.

The government's new fraud strategy aims to combat this head-on, with a primary focus on reducing fraud by 10% and protecting hard-earned money from the clutches of criminals. In this blog, we will explore how this strategy will impact the role of anti-financial crime officers in their ongoing battle against financial fraud.

Understanding the Severity of the Issue

Fraudsters have become increasingly cunning, relentlessly targeting vulnerable individuals, businesses, and organisations, both online and in their own homes. Their activities not only pose a significant risk to our national and economic security but also provide a breeding ground for organised crime. Recognising the urgency to address this issue, the government's 2021 Integrated Review of Security, Defence, Development, and Foreign Policy emphasised the importance of the Fraud Strategy in safeguarding the integrity of the UK's financial systems.

Jessica's commentary:

"Fraud is a large criminal industry – it's an easy way to make money. We often think of fraudsters as the bad guys, and this is certainly the case most of the time. Many fraudsters conjure up and commit their own fraudulent activity. But the profile of a fraudster is also becoming more complex, with investigations identifying instances of vulnerability and human trafficking within organised criminal gangs. In some cases they are using trafficked individuals to commit fraud (such as romance scams) from places as far away as South East Asia."

Urgent Action Required

The financial consequences of fraud are devastating, with reported losses totalling a staggering £2.35 billion in 2021 alone. However, it's important to acknowledge that the impact extends far beyond financial loss. Fraud also inflicts immeasurable emotional harm, with some victims tragically resorting to taking their own lives. Consequently, the government is committed to taking swift and decisive action to tackle this ruthless crime.

Collaborative Approach

The success of the fraud strategy hinges on effective collaboration between various stakeholders, including government bodies, law enforcement agencies, regulators, industry players, and charitable organisations. By working together, the key stakeholders can enhance the protection of consumers and individuals and ensure a collective response to combat fraud. Anti-financial crime officers across all these stakeholders will be key players, and there will be an emphasis on working collaboratively as part of your role. The government's strategy says that 'when communication flows both ways, important breakthroughs are possible.' It's likely, therefore, that Anti-Financial Crime officers will start to see improved data-sharing methods and the removal of barriers, so that they are empowered to share information with other businesses and public sectors.

Jessica's commentary:

"Improved data sharing has been the biggest discussion point in anti-financial crime for years. Existing barriers remain in terms of privacy concerns, but the new Economic Crime Bill starts to peel away some of these barriers. We are also seeing several data sharing initiatives, including one with more than half a dozen UK banks in advanced talks with the UK government and law enforcement on how to systematically share data. They are expected to launch pilots shortly."

Additional resources and funding

Recognising the need for increased resources, the government has pledged £100 million in additional funding to strengthen law enforcement's efforts against fraud. This should translate in to enhanced support for anti-financial crime officers, with additional resources made available to bolster your effectiveness in identifying, investigating, and prosecuting fraudsters.

The fraud strategy places a strong emphasis on proactive measures to impede fraudsters' activities, and to ensuring that victims are properly reimbursed and looked after. The government feels that efficient and streamlined reporting systems are vital in the fight against fraud. There are plans to launch a state-of-the-art reporting system, empowering victims to directly report fraud and cyber-crimes to the police. Across industries, anti-financial crime officers will play a part in ensuring customers can report fraud on the company's platforms, as well as following up those reports and sharing intelligence quickly and efficiently with other stakeholders.

Jessica's commentary:

"Mandatory reimbursement for Authorised Push Payment (APP) fraud victims is a key focus for the payments industry. Once launched, payments firms will be required to reimburse fraud victims. Whilst this is positive for victims, it will be a logistical challenge for many smaller payments institutions. The Payments Systems Regulator will be issuing more guidance shortly and is proposing a tight implementation date of 2nd April 2024."

Incentivising All Stakeholders

The government is committed to incentivising all parties involved in the fight against fraud. The tech sector will be required to implement additional protections for customers, backed by stringent penalties for non-compliance under the Online Safety Bill. Transparency in highlighting the safest platforms will incentivise companies to prioritise fraud prevention; so this in turn may lead to businesses upskilling their teams as well as hiring strong financial crime, fraud and compliance professionals to ensure that they are meeting the requirements. Businesses with a proven track record of identifying fraud, building in strong anti-fraud measures to their platforms and assisting customers, will ultimately attract trust from their target market. Anti-financial crime professionals will play a large part in this.

The government's comprehensive fraud strategy provides a clear roadmap for combating the growing threat of fraud. As an anti-financial crime officer, your role in implementing these measures is pivotal in protecting individuals and the nation's financial well-being. With increased resources, support, and a collaborative approach, you will be better equipped to pursue fraudsters, block their attempts, empower victims, and strengthen the overall law enforcement response to fraud.

Jessica Cath

Jessica Cath is the Head of Financial Crime at Thistle Initiatives, a regulatory compliance and financial crime consultancy. Jess works with a range of firm types within the regulatory sphere (from payments to crypto, high value dealers to insurance and investments) to meet financial crime requirements and mitigate the risk faced by their business.

Before joining Thistle, Jess was the Head of Financial Crime Project Delivery at FINTRAIL, working predominantly with FinTechs to build, scale and assure all elements of the financial crime framework. Jess has broad experience working with a range of institutions to design and enhance policies and procedures; implement systems; overhaul processes; change embedded cultures; and support s166 reviews and remediation both in the UK and abroad.

Prior to joining FINTRAIL, Jess worked at Capco managing large scale remediation and transformation exercises at more traditional financial institutions (including private banking and Tier 1 banks). Jess also has a background in intelligence and investigations from Kroll and a Masters in Intelligence and International Security.