Responses to Economic Crime… are things changing?
Increased awareness about economic crime is improving our understanding of the harm it can cause to the economy and gradually moving the narrative away from it being considered a ‘victimless crime’. Yet, better information gathering by various agencies shows the trajectory of fraud is still moving in only one direction – upwards, costing the UK economy an estimated £137 billion per year. It’s a sobering fact that fraud now represents around 39% of all crime according to the Crime Survey for England and Wales (CSEW).
During the pandemic, while most crime decreased, fraud continued to increase. Action Fraud detected a very marginal fall off in victim reporting in the early days of lockdown, however fraudsters quickly took advantage of increased online traffic to enact opportunities via SMS, email and social media and ensure criminality continued to thrive:
- Action Fraud reported 405,334 cases of fraud in the last year with around £3.1 billion in losses https://www.actionfraud.police.uk/fraud-stats (accounting only for fraud reported to the police, which the Office for National Statistics (ONS) estimates is just 15% of all fraud activity).
- The ONS reported 5.2 million fraud offences in the year ending December 2021. This represents a 41% increase since December 2019.
- Citizens Advice estimate that around 40 million adults in the UK have been targeted by criminals for fraud.
Voices in various sectors are calling for more to be done to tackle this endemic problem. The Daily Mail recently called for a major overhaul of the system, including forward-thinking suggestions such as the appointment of a minister for fraud to hold the government accountable.
For its part, the Across Party Parliamentary Group (APPG) for economic crime has already published a manifesto recommending a number of practical improvements, which include:
- Establishing an Economic Crime Fighting fund that reinvests a proportion of the proceeds of criminal and regulatory fines, asset recovery and deferred prosecutions more consistently into economic crime enforcement
- Expanding the Economic Crime Budget for enforcement agencies
- Ensuring the UK Government’s autumn 2022 10-year Fraud Strategy includes a significant plan for long-term policing reform and a significant, ring-fenced budget for a strengthened capability to effectively tackle the growing crisis of fraud
While all this interest helps creates momentum, the question remains, where to start?
Certainly, there are three key areas that would have an immediate impact. First, the system needs greater central leadership to drive and coordinate radical change that will deliver more tangible outcomes. Secondly, we must move to industrialise prevention through wider adoption of data and technology that can, longer term, design out the current vulnerabilities in the system; keeping the doors of the financial ecosystem firmly closed to criminals will not only reduce opportunities to enact harm, but will also help mitigate the current (unmanageable) demand on law enforcement. And finally, again with the help of technology, we must improve the sharing of risk intelligence across not only the financial services, but other sectors too – where vulnerabilities can be exploited to open a back door into the financial ecosystem.
All of this is highly achievable with the right public and private partnership supported by appropriate regulatory frameworks for the sharing of information for crime prevention purposes. And a better understanding of the threats emanating from the online sector is in everyone’s best interests in working towards building more resilient structures and services for the public.
It is widely recognised that funding across the economic crime enforcement landscape is inadequate with 0.8% of the police workforce responding to what is a third of all crime. But how exactly can policing make meaningful changes? The think tank, Royal United Services Institute (RUSI) has been considering this issue and produced a thought-provoking publication: Five Problems with Economic Crime Policing – and How to Solve Them.
While the creation of a single economic crime force is one suggestion – and one that is intuitively appealing – it may in fact cause more issues than it solves, resulting in unnecessary operational silos from interlinked crime threats, divesting policing of its responsibilities in this field and duplicating specialist policing capabilities. Rather, the recommendation is to build on what has already started. The industrialisation of a multi-sector approach, established at a regional tier, with a ‘brain’ function that can analyse the data, make sense of the threat, and maximise prevention opportunities. It is a recommendation that meets with the APPG request for greater investment and would utilise the limited skills and resources available at this time.
Austerity and the cost-of-living crisis will only add pressure to an already fragile system, which is why creating innovation and implementing change now, is critical to success. Success will rely on a clear strategy that builds people skills, improves connectivity through a central intelligence system, and coordinates action via the most appropriate agency. Working as one team, using expertise and intelligence from across the whole system, with clear system ownership are the first steps to addressing the huge, but not unsurmountable, challenge ahead.
Karen Baxter
Economic Crime Expert, LexisNexis Risk Solutions
