Out-Law News 4 min. read

UK’s national fraud strategy sets ambitious enforcement goals

Tech companies and financial institutions in the UK and elsewhere will be asked by the UK government to take fraud more seriously and collaborate with law enforcement under the UK’s new national strategy for tackling fraud.

However, implementing the strategy (74-page / 2.1MB PDF) is likely to be met with practical challenges, according to legal experts at Pinsent Masons.

According to the Home Office, fraud poses a significant threat to the people, prosperity, and security of the UK. It is by far the most common crime and now accounts for over 40% of all offences in England and Wales. The strategy attempts to create a co-ordinated approach between the government, law enforcement and the private sector to significantly reduce fraud and better protect the public, with the goal of cutting fraud by 10% from 2019 levels, down to 3.33 million frauds by the end of 2024.

A key part of the strategy will see the government dedicate more resources to seek to improve the law enforcement response to fraud, such as establishing a new ‘National Fraud Squad”’ with over 400 new specialist investigators and making fraud a priority for the police. Its intention is to put more fraudsters behind bars through better investigation and prosecution processes for fraud and digital offences.

Financial crime expert Andrew Sackey of Pinsent Masons said the new focus was welcome, but the timescales required to properly staff and upskill the new agency would be “challenging”.

“Recruiting and training specialist fraud investigators takes time, and the government’s own timetable confirms that only 160 of the new staff are expected to be in place by the end of April 2024, with 285 to be in place by the following year, and the balance in place by 2026. Perhaps more significantly, the roles will be recruited through fair and open competition, and so existing economic crime and fraud investigation personnel will apply - creating a negative impact on other important economic crime agencies who themselves are continually struggling with vacancies,” said Sackey, who was previously head of corporate criminal investigation at HMRC’s Fraud Investigation Service.

The Fraud Investigation Service is currently the UK’s largest economic crime investigation agency, with around half of its 5,000 staff being criminal investigators. The Serious Fraud Office (SFO), which has around 500 full time staff, is the second largest specialist investigation entity.

Creating another new agency may also cause confusion about how the division of responsibility enforcement bodies will work, said Fiona Cameron of Pinsent Masons. “Clear guidance” would be required to “ensure the division of responsibility is clear and duplication avoided”, she said.

The government also intends to make it easier for victims to report fraud through a new national fraud and cybercrime reporting service. This service would replace the existing Action Fraud reporting centre, which is run by the City of London Police and has been criticised for its lack of responsiveness.

Alan Sheeley of Pinsent Masons said that the agency which takes on this remit must act on the matters that are reported to it and, importantly, provide updates to victims.

“All too often clients would state that they have reported the fraud and assume that meant something would actually happen. Sadly, a victim is all too often a victim of the fraudster and a victim of the system because they assumed something was happening after the report. Any development in this area is a welcome step in the right direction,” he said.

Enforcement efforts under the new strategy will not be limited to the UK, given the digital and global nature of modern scams. The UK government has vowed to deploy the UK intelligence community and lead a new global partnership to pursue fraudsters wherever they are in the world, and to set up a new multi-agency fraud targeting cell in the National Crime Agency.

Sheeley added: “A global strategy is a great idea. However, as with all information systems, it will depend on how the recipient of the request acts. Without a significant increase in resources from law enforcement around the world, the speed of information being provided will still be slow; too slow in most cases to result in effective cash recoveries for victims”.

The UK’s relationship with law enforcement bodies in the EU post-Brexit could be another hurdle in achieving its international ambitions, said Sackey.

“One consequence of Brexit is that the UK no longer has access to the European Arrest Warrant. At least 10 EU member states have notified their intention not to extradite their own nationals outside of the EU, with others only doing so with the consent of the requested person,” he said.

The strategy also sets out plans to use new legislation and regulations to require private sector companies to better protect their customers and the public from the actions of fraudsters. Legislative initiatives already in progress include enabling the Payment Systems Regulator (PSR) to require reimbursement of victims of ‘authorised’ fraud by all PSR-regulated payment service providers (PSPs); as well as provisions aimed at reducing online fraud in the Online Safety Bill.

The strategy also mentions the government’s intention to “[improve] the way decision-makers of the corporate are identified by law” in order to make it easier to prosecute businesses for the crimes of senior managers. The government recently legislated for the creation of a corporate ‘failure to prevent’ fraud offence by way of an amendment to the Economic Crime and Corporate Transparency Bill, which is currently passing through the House of Lords. Fiona Cameron said that a criticism of this amendment is that it did not take the opportunity to make changes to address the difficulties of identifying senior managers at fault.

Delivery of the strategy will be led and governed by the Home Office over a three-year period, to the end of 2025.

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