Two recent pronouncements by UK government suggest that the authorities are once more taking fraud seriously: the creation of a task force, coordinating counter-fraud activity across a spectrum of expertise and risk, mainly in the banking sector; and the confirmation that David Green, QC, will remain as director of the Serious Fraud Office until 2018. These have built on a number of signs that interest in fighting fraud is finally being revived.
It is 30 years since the Roskill Fraud Trials Committee reported on how best to tackle serious and complex fraud. The Serious Fraud Office was the main product of this review and for about ten years after its establishment, UK law enforcement sought to find the most effective — and economical — way to fight fraud. Then for a few years it pretended the problem did not exist.
In 2005 Lord Goldsmith, then the attorney-general, tried to stop the rot by convening a fraud review to examine ways to improve the detection, investigation and prosecution of cases. The Fraud Act 2006 and the Bribery Act 2010 were further statements of intent, modernising fraud and corruption offences. As part of the review, it was estimated that losses through fraud exceeded £70 billion, and the clear and continuing message is that the cost of fraud to the private and public sectors is massive.
The global financial crisis of 2008 prompted, as most recessions do, a further rethink of how serious fraud, in particular in the banking industry, can be tackled. Bankers, who “caused” all the problems in the first place, got away with it because the system was not geared up to investigate and prosecute their reckless and unethical conduct. Media, public and parliamentarians protested and insisted that bankers be held to account, and some new legislation has been put in place, which might, arguably, make it easier to do so in future.
The National Crime Agency (NCA) — set up in late 2013 — is working hard to disrupt, apprehend and prosecute organised crime, and to coordinate action and intelligence across a range of law enforcement, including money laundering. The NCA focuses considerable resources on cyber crime, working with others, including the Metropolitan Police cyber crime unit (Operation Falcon), to educate the public about cyber risks and to create an expert capacity within law enforcement to identify and disrupt perpetrators.
On top of all this, last week the Home Office announced its latest counter-fraud measure: it is setting up a task force to combat banking fraud, by understanding the threat, sharing intelligence so as to target the most serious organised crime groups, supporting victims, changing customer behaviour, and tackling systematic vulnerabilities.This flurry of activity is reassuring, particularly if the resources allocated to the tasks match the needs. But here’s the rub: counter fraud activity is expensive and resource-intensive. It requires expertise and experience. Difficult judgments need to be taken about priorities. Prosecutions need to be refined and skilful. And as soon as government attention strays from the importance of fighting fraud and being vigilant about new threats, the resources quickly dry up. With this, enforcement skills are lost. In parallel, the skills, determination and inventiveness of fraudsters increase.