Joining forces against the fraudsters

The number of people targeted by financial crime is reported to have skyrocketed during the pandemic.

Far from being victimless, financial crime - which includes things like phone and text scams - impacts one in 15 UK citizens. It can also fund other serious crimes like drug smuggling, modern slavery and sexual exploitation.

As a strategic delivery partner for the Government’s Economic Crime Plan, we’re joining forces with other organisations to help recover lost assets with the aim of fixing cracks in the system that can be abused by ruthless, organised gangs armed with sophisticated tech.

Everyone involved in supporting the plan wants the same outcome: to protect citizens and customers, disrupt the illegal gangs and bring an end to financial crime. With a common ambition and approach, we can achieve transformational change.
Chris Bostock

Deloitte director

The Government’s plan calls for a ‘whole system’ approach to combat the criminals. A key part of our response has been to establish the Deloitte Forum for Tackling Illicit Finance.

It’s designed to help build solutions and co-ordinate initiatives with clients across the corporate and financial sectors, law enforcement and government.

“In today’s increasingly interconnected, digital landscape, organised crime gangs are continuously evolving their operations,” said Chris Bostock, a director at Deloitte, who leads the forum’s work.

“They act with speed and sophistication that is hard to keep pace with, and our clients spend trillions of dollars a year to counter the criminals.”

With major benefits for business, the Government’s plan is also designed to do more to protect vulnerable people and communities.

With our purpose – to make an impact that matters – in mind, we have an important role to play, supporting people, communities and the Government as everyone works together to rebuild in response to the pandemic.

Responding to the threat - together

“Everyone involved in supporting the plan wants the same outcome,” continued Chris “to protect citizens and customers, disrupt the illegal gangs and bring an end to financial crime.”

“We believe we can – and should – respond to this threat, and that it’s best to do that together.”

“This requires a commitment from all parties to be proactive, rather than defensive and reactive. With a common ambition and approach, we can achieve transformational change.”

A four-step guide

The challenge is significant - and will require sustained effort. To help, we’ve outlined four key steps that, if acted on collectively, will help to strengthen the system.

1. Improve alignment

A stronger focus on prevention across the public and private sector would help to sharpen the regulated sector’s ability to identify suspicious activity. In some cases, to achieve this, legislative and regulatory frameworks must change and new mechanisms be put in place. High-value activities - like better sharing of information and intelligence - should be a major focus.

2. Increase collaboration

The adage that ‘the whole is greater than the sum of its parts’ is certainly true of information and intelligence relating to illicit finance. We can do much more to collaborate, particularly in enabling banks to share financial crime intelligence with other agencies. Lessons might be learned from the U.S. Department of Justice, whose collaboration with the private sector has helped it to make a dramatic step-change in the seizure of criminal assets.

3. Embrace new technologies

Emerging technologies like new payment platforms, cryptocurrencies and Digital ID provide an opportunity for the system to start ‘designing out’ vulnerabilities. At the same time, they represent opportunities for criminals to exploit the system. While the idea of a national system to analyse data centrally would be a significant undertaking, we’d expect such an approach to reduce the threat of economic crime.

4. Make broader connections

Illicit finance doesn’t stop at financial services. Other sectors need to play a strong, active role. For example, social media companies can help tackle the explosion in ‘romance fraud’, telecommunications companies have a role to play in tackling smishing (scamming via text message) and other sectors like real estate must be alive to the risks of money laundering.

Data detectives

One important recommendation from the Economic Crime Plan is the need for better data sharing between UK banks to disrupt money laundering.

We’ve joined forces with the Home Office and trade association UK Finance on a pilot that brings together multiple banks, regulators and third-party organisations, which could inform future legislation and regulation.

The idea is that, with better data sharing within legal and data privacy frameworks, agencies may be able to more quickly identify criminals who repeatedly subvert the banking systems and use multiple banks to launder proceeds of crime.

Identifying these criminals could potentially prevent thousands of crimes every year and their associated loss, and help to build greater consumer confidence in financial systems.