Earlier this month, the UK Government unveiled its new fraud strategy, outlining an ambitious plan to combat fraud and cybercrime by reducing it by 10 percent before 2025. With fraud accounting for 41 percent of all crimes in the UK, the government has recognised the need for a coordinated response from government entities, law enforcement, and the private sector. This comprehensive strategy focuses on modernising the approach to fraud detection and prevention, enhancing public sector understanding of risks, and allocating substantial investments to law enforcement and the criminal justice system.
The Scale of Fraud in the UK: Fraud has emerged as the most commonly experienced crime in the UK, prompting the government to reclassify it as a national security threat on par with terrorism.
To grasp the gravity of the situation, consider the following statistics:
- £2.35 billion was lost by victims in 2021 alone.
- In 2022, 64 percent of UK businesses encountered fraud, corruption, or other economic crimes.
- 18 percent of victims fell prey to scams multiple times in 2022.
- Alarmingly, less than one percent of police resources are currently dedicated to tackling fraud.
- The estimated cost to society in England and Wales amounted to at least £6.8 billion in 2019-20.
Investments to Strengthen Law Enforcement
Recognising the need to bolster the response of law enforcement, intelligence agencies, and the criminal justice system, the UK government is investing £100 million as part of a larger £200 million allocation announced in the 2022 spending review. This funding will be disbursed over three years and will be complemented by an annual £100 million Economic Crime (Anti-Money Laundering) Levy, dedicated to anti-money laundering (AML) purposes.
Key Actions to Combat Fraud: The UK’s strategy to fight fraud revolves around three pillars: pursuing fraudsters, blocking fraudsters, and empowering the public. To achieve these objectives, the government has outlined several strategic measures:
Establishment of a National Fraud Squad
The UK government is taking significant steps to combat fraud by establishing a dedicated National Fraud Squad. This specialised unit will consist of over 400 new specialist investigators who will be tasked with investigating and prosecuting fraud cases. By increasing the resources and expertise dedicated to fraud investigations, the government aims to enhance its ability to tackle complex fraud schemes and bring fraudsters to justice.
Creation of a UK Intelligence Community (UKIC) Cell
To strengthen intelligence-led disruption efforts, the UK government will establish a UK Intelligence Community (UKIC) Cell. This new cell will play a crucial role in identifying and disrupting fraud networks by leveraging intelligence capabilities. By adopting an intelligence-led approach, the government aims to stay ahead of evolving fraud tactics and take proactive measures to prevent and deter fraudulent activities.
Replacing Action Fraud with a State-of-the-Art Reporting System
Action Fraud, the existing reporting system for fraud incidents, will be replaced with a state-of-the-art reporting system. The new system will streamline the process of reporting fraud, making it more user-friendly and efficient for victims to report their experiences. The improved data collection and streamlined workflow will enable authorities to respond more effectively to reported cases, ensuring a more coordinated and robust response to fraud.
Leading a Partnership to Pursue Fraudsters Worldwide
Recognising that fraud is a global issue requiring international cooperation, the UK government will take a leading role in forming partnerships with other countries to pursue fraudsters worldwide. Through information sharing, collaborative investigations, and joint operations, the UK aims to disrupt transnational fraud networks and extradite individuals involved in large-scale fraud schemes. By working together on a global scale, the government seeks to create a united front against fraudsters, making it harder for them to operate across borders.
Stopping Criminals from Abusing the Telephone Network
The government is determined to crack down on criminals who abuse the telephone network for fraudulent activities. Several measures will be implemented to address this issue effectively. Firstly, cold calls for all financial products will be banned, minimising the opportunities for scammers to exploit unsuspecting individuals. Secondly, SIM farms, which are used for fraudulent purposes, will be banned, cutting off a common tool used by fraudsters. Additionally, efforts will be intensified to stop spoof calls, protecting the public from fraudulent schemes that manipulate caller IDs. These measures aim to disrupt the channels through which fraudsters target victims, making it harder for them to carry out their illicit activities.
Making the Tech Sector Commit to Customer Protection:
The UK government recognises the crucial role of the tech sector in protecting customers from fraud. To ensure a higher level of security and protection, the government plans to introduce legislation and encourage voluntary commitments from technology companies. This approach aims to ensure that robust security measures are in place to safeguard customers’ personal and financial information. By holding the tech sector accountable and promoting best practices, the government aims to create a safer digital environment for individuals and businesses, reducing the opportunities for fraudsters to exploit vulnerabilities.
Making Reporting Fraud Easier on Social Media and the Internet
Fraudsters often utilise social media platforms and the internet to carry out their fraudulent activities. To combat this, the government aims to simplify the process of reporting fraud on these platforms. By improving accessibility and providing clear guidelines, individuals will find it easier to report fraudulent content, accounts, or activities they encounter online. Streamlining the reporting process will enable law enforcement agencies to take prompt action against fraudsters operating in the digital space, reducing their ability to defraud unsuspecting victims.
Helping Banks Slow Down Suspicious Payments
Banks play a vital role in detecting and preventing fraudulent transactions. To support their efforts, the government will facilitate measures to help banks slow down suspicious payments.
Technology plays a crucial role in the fight against fraud, offering innovative solutions that enhance fraud prevention, detection, and investigation. Here are short paragraphs explaining how specific technologies such as digital ID, AML compliance software, and open banking can help combat fraud:
Digital identification systems, often based on biometric or cryptographic technologies, provide a secure and reliable means of verifying the identity of individuals online. By leveraging digital ID solutions, businesses and government agencies can establish strong user authentication processes, reducing the risk of identity theft and fraudulent activities. Digital ID systems enable robust identity verification in various sectors, such as financial services, e-commerce, and government services, helping to prevent fraud by ensuring that individuals are who they claim to be.
AML Compliance Software
Anti-Money Laundering (AML) compliance software utilizes advanced algorithms and data analysis techniques to identify suspicious patterns and transactions that may be indicative of money laundering or other financial crimes. These software solutions automate the monitoring and analysis of large volumes of financial data, flagging potential red flags and anomalies for further investigation. By leveraging AML compliance software, financial institutions and regulatory bodies can enhance their ability to detect and prevent fraudulent activities, ensuring compliance with AML regulations and mitigating the risk of facilitating illicit financial transactions.
Open banking refers to the practice of sharing financial data securely and with user consent between different financial institutions and third-party providers. By enabling the secure exchange of financial information, open banking promotes greater transparency and innovation in the financial industry. This increased transparency can aid in fraud detection and prevention by allowing financial institutions to access a broader range of data sources and perform more comprehensive risk assessments. With enhanced access to real-time financial data, banks and other financial service providers can identify suspicious activities more efficiently and take proactive measures to mitigate fraud risks.
In conclusion, technology, including digital ID systems, AML compliance software, and open banking, plays a vital role in the fight against fraud. These technologies provide robust identity verification, enhance monitoring and analysis of financial transactions, and facilitate the secure sharing of financial data. By leveraging these technological advancements, businesses, financial institutions, and regulatory bodies can strengthen their fraud prevention efforts, detect fraudulent activities more effectively, and ensure the integrity of financial systems.