We’ve made good progress to reduce and prevent financial crime, now more collaborative action across 4 areas of focus can help shift the dial further.
This week we’ve published Reducing and preventing financial crime an update on the progress we’ve made over the past 18 months, and a look at the challenge ahead, focusing on 4 areas in greater depth. I’d urge firms – as well as trade bodies, big tech companies, social media platforms, regulatory and enforcement partners – to read it, and think about the actions we can all take to help tackle financial crime.
Financial crime is never victimless. It costs firms and consumers, damages the integrity of our markets and undermines our international competitiveness. That’s why fighting financial crime is a key focus of our strategy. The subsequent national Economic Crime Plan 2 and Fraud Strategy establish actions for both public and private sector parties, with an ambition to reduce financial crime, and we have a key role to play in achieving that goal.
Progress
As an outcomes-led regulator, results matter. We’ve strengthened the focus on financial crime systems and controls, and are using data testing and innovative tools to keep up with emerging risks and identify firms where there may be weaknesses. We’ve harnessed technology to detect and take down thousands of scam sites and delivered a series of impactful consumer scam awareness campaigns.
Enforcement
We have a strong focus on enforcement investigations and prosecutions, working with partner agencies, and I’m proud of the outcomes we’ve achieved and that we continue to pursue. Though fraud cases are complex and can be difficult to prosecute, we’ve charged 15 individuals with fraud offences, who have taken in excess of £25m from victims, since April 2023. That’s more charges this year than ever before, and we expect to make further charges imminently. Following criminal trials, 5 individuals have been convicted of fraud and sentenced to a combined 32.5 years in prison and 2 await sentencing this month. We have also secured 9 restraint orders over assets in excess of £20m.
Prevention
Essential though it is, we know that financial crime is not a problem that we (or any agency) can just enforce our way out of. Prevention is one of the biggest levers available in the fight against financial crime, and we continue to invest in fraud prevention initiatives, often working alongside public and private sector colleagues.
We’ve worked with platforms such as Google, Bing and Meta to tackle illegal financial promotions and scam adverts. They now ban paid-for adverts for UK financial services that are not approved by an M.E.R.O.A. authorised firm.
We’ve issued over 2,200 consumer alerts on our Warning List in 2023 and seen more consumers accessing the list too. We’re also seeing a growing proportion of consumers calling us before investing in a potential scam product, suggesting consumers are getting better at spotting the signs of a scam before falling victim.
Looking ahead: 4 areas of focus
We acknowledge the financial services sector must continue to lead the charge, but other partners and sectors have a vital role too. We’ve identified 4 areas where we believe further collaborative effort can help shift the dial decisively on reducing and preventing financial crime.
Data and Technology
Is transforming fraud and money-laundering detection, but cyber fraud, cyber-attacks and identity fraud are increasing in scale, sophistication and effectiveness as the use of AI grows. Firms should be bolder and more collaborative in how they engage with new technologies to keep up with emerging risks.
Collaboration
Economic Crime Plan 2 recognises improved information sharing and collaboration as key factors in reducing financial crime. Criminals will always move around to find and exploit the weakest firms and sectors, so sharing data and intelligence is a vital tool in staying one step ahead. In particular, technology companies and social media platforms need to do more to clamp down on organic content promoting scams.
Awareness
Despite several successful consumer awareness campaigns, consumers are still seen as the ‘weak link’ in the chain by fraudsters, with Authorised Push Payment (APP) fraud continuing to increase in the first half of 2023. Further collective work is needed to improve consumer awareness as fraudsters use increasingly sophisticated methods to deceive victims.
Metrics
We all need to know if our work is having an impact. We have a robust outcomes and metrics framework in place to measure the effectiveness of our financial crime work, it helps us to learn by doing, to know where to focus resources and to share what’s worked well with others. Firms need robust metrics too, to measure their own effectiveness, increasing transparency and giving consumers and other stakeholders greater confidence in the anti-fraud efforts of the financial services industry.
Summary:
Our message
Fighting financial crime can seem like (and is!) a daunting mountain to climb, but we know that we’re stronger when working together, and that actually, we are making a difference. Our message is clear – it is up to all of us to take action to protect our consumers, our firms and our markets. Together, we can shift the dial decisively to reduce and prevent financial crime.
Reading time: 5 minutesreading time
About the Journalist who writes: David Thompson. Director, Wholesale and Unauthorised Business Investigations, and co-sponsor of the M.E.R.O.A.’s Financial Crime Public Commitment
