Global pandemic highlights need to reform economic crime investigation

Posted on 17 November, 2020 by Advance 

The Covid-19 global pandemic has created new opportunities for economic crime and has highlighted the need for better funded and coordinated action against organised crime gangs (OCGs) engaged in fraud.

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This was the conclusion of experts on a panel organised by Resilience First to look at the issue of tackling economic crime in a Covid-19 world.
Lockdown has caused crime in general to fall, as the movement of criminals has been restricted alongside everyone else, but this has led to an increased focus by OCGs on digital economic crimes such as online retail fraud, payment diversion fraud and cyber-attacks. This has thrown into sharp relief the lack of resource for fraud investigation in the UK and prompted calls for organisational reform.
Robert Hall, Executive Director or Resilience First, said: “Economic crime remains a significant threat to the security and prosperity of the UK. It impacts on all of our society, including our citizens, companies and communities. Fraud is now one of the most common crimes in the UK with 1 in 15 people falling victim to it every year. All economic crime weakens people’s faith in the effectiveness of governmental and commercial organisations.”
“This picture has been brought into sharp relief by the pandemic. The old adage that crime never sleeps is true even during a pandemic.  Whilst the effect of the pandemic has caused a decrease in some organised criminal activities, it has also provided new opportunities in other areas, such as cybercrime, counterfeiting, money-laundering and fraud.”  
Panel Chair, Nicola O'Connor, Legal Director, Bird and Bird, said: “We are in a perfect storm situation. Never before have we had unprecedented levels of government support by way of loans and grants combined with people really struggling for survival as individuals and businesses as well.”
“We have heard quite a lot about the government’s job retention scheme and how that might be open to abuse. We know there has been a hotline where over 10,000 people have reported various businesses in relation to fraud relating to the furlough grants.”
“I have been inundated with calls about bounce back loan schemes and how that can be open to abuse. This is a health crisis so it is unsurprising that there has been lots of discussion around fraud relating to healthcare providers.”
Graeme Biggar CBE, DG National Economic Crime Centre, National Crime Agency, said: “Crime generally dropped when the pandemic took hold and that was not surprising because everyone was locked down and at home. Reported fraud against specific individuals and businesses actually dropped by 25% in the first couple of months of lockdown.”
“Covid was used as a hook and an opportunity for fraudsters. We definitely saw this growing during the period but it is important to keep that in context and Covid specific frauds were never more than 2 to 3% of the reports coming into Action Fraud. These included frauds about fake PPE, test kits and hand sanitisers.”
“Online shopping fraud did increase pretty much in proportion to the increase in online shopping. We also saw an increase in investment fraud and romance fraud - two high-harm, high-value types of fraud. We are now back at the previous trend which showed a steady increase in fraud.”
“Fraud is 35% of reported crime and tackled by less than 1% of policing.  We must respond better, and that needs: clearer leadership & coherence of the fraud system, to provide clear priorities and accountability;  more proactive, top-down intelligence, using all-source public and private data, to identify high harm offenders & methodologies; increased law enforcement capacity, better skilled and nationally tasked, to disrupt those high harm offenders and methodologies; more preventative activity, informed by intelligence and working with the private and third sector, to better educate the public and help design our fraud; and an improved Action Fraud & victim support, to gather better intelligence, enable quicker action and reduce re-victimisation.”
Chris Greany FCMI, Managing Director, Templar Executives Ltd, said: “Financial crime is the biggest crime type in the UK today and it does need a much better prevention and detection strategy. The response to fraud for many forces has been completely forgotten. As a personal victim of fraud, you don’t get a great response, as a business victim of fraud I’m sorry to say you don’t get any response.”
“Economic crime absolutely needs to be attacked at state level and there has to be a coherent strategy that uses the full capacity of the public and private sector. A coherent board enshrined and supported by legislation that has the power and autonomy to act against fraud and economic crime was what was required.”
“We need a national upstream strategy that prevents rather than detects economic crime and I do think we need to get away from the idea that prosecution is the answer to this. Business does have to try to protect itself as well by spending a little bit of money on its staff to protect its business.”
Paul Davies, Head of Loss Prevention & Security, Selfridges, said: “As a retailer this year we closed our physical stores for the first time in our 111-year history. Trading remains tough.  Even before the UK entered another lockdown, customer footfall across UK high street was down in all major cities. When there is footfall, stores have to manage capacity limitations to comply with social distancing and operating costs remain high in comparison. ”
“When our physical stores closed, as a risk management function we have become increasingly more agile in our approach to crime over the course of the year as the focus of our commercial operation has shifted from being primarily physical in our stores to digital. We have had to be much more reactive and responsive than proactive this year.”
“For example, we focussed our efforts towards digital fraud, third party or carrier logistics theft and customer international returns fraud. When we reopened our stores after the first lockdown we saw a significant increase in cash transactions which was both unexpected and exceptional. Our focus then turned immediately back to the risk of money laundering or counter cash and other crimes at the point of sale. We would expect this combination of digital and physical risks to continue and are preparing for it.”
Resilience First is a not-for-profit business organisation that aims to improve business resilience in urban areas. It was launched in June 2018 and since then has gained a range of international champions and associates who all believe that resilience can be better delivered by collaborative working through communities.