Fraud and economic crime have continued to rise at an alarming rate. Work being done by Government is still not enough and not urgent enough to stem the rise, according to a report by the Treasury Select Committee of MPs. The MPs have complained of ‘mismatch between the scale of the problem and the response’.
Self-regulation of online platforms has failed – such as, customers are being offered fraudulent financial products online, the report stated.
The report calls on UK Government to set higher company formation fees, to prevent fraudsters from hiding their identities behind UK businesses. “Reform of Companies House is essential if UK companies are no longer to be used to launder money and conduct economic crime,” was among the report’s conclusions.
While the report welcomed the Economic Crime Levy on businesses, MPs wanted to see accountability – an account of how the Levy will be spent, ‘and an evaluation of its effectiveness’.
Mel Stride, Conservative MP for Central Devon, Chair of the Treasury Committee, said: “For too long, pernicious scammers have acted with impunity, ripping off innocent consumers with fraudulent online adverts, impersonation scams and dodgy crypto investments. Unfortunately, fraud has soared during the pandemic, and as MPs we’ve heard heart-breaking stories of individuals who have fallen victim to these criminals and lost large sums of money.
“While the Government have made some progress in this area, we’re today calling on them to push harder and act faster on the growing fraud epidemic. Some of our recommendations, such as legislating against online scam adverts, can be implemented quickly. Others, including crypto regulation and Companies House reform, will require a longer-term approach. Taken together, our proposals give the UK a fighting chance to get back on the front foot and stop these scammers in their tracks.”
As for response, the report describes the number of agencies responsible for fighting economic crime and fraud as ‘bewildering’. The report adds: Each of the enforcement agencies has other crime-fighting or regulatory objectives, and although the joint working co-ordinated by for example the National Economic Crime Centre is welcome, there is a bigger question about whether there should be a single law enforcement agency with clear responsibilities and objectives to fight economic crime.”
Witnesses giving evidence to the cross-party MPs included regulators such as Mark Steward, director of enforcement at the FCA; tech figures such as Will Semple, Director, Global Information Security Team, eBay; Graeme Biggar, Director-General at the National Economic Crime Centre, part of the National Crime Agency (NCA); and MPs John Glen, Economic Secretary to the Treasury, and Damian Hinds, Minister for Security and Borders at the Home Office. The report was up to date enough to note that Lord Agnew, the joint Treasury and Cabinet Office Minister for Efficiency and Transformation, resigned and was ‘sharply critical of failure by the Government to address fraud’.
The report covers the growth in economic crime and the Government response; automated push payment fraud; crypto-assets; and money laundering. As for crypto, the MPs complained that although the Government introduced AML (anti money laundering) regulations for cryptoasset firms in 2020, ‘there are so many firms which have not yet been registered’. More generally on AML, the report complained that official work ‘seems slow and inadequate given the scale of the threats it [AML] poses’.
On SARs (suspicious activity reports) as generated by banks and others, the committee said that reform of the SARs regime ‘can only deliver change if the law enforcement agencies have the ongoing capacity and funding to tackle the criminal activity indicated by SARs’.
For the 86-page report visit the parliament.uk website.
