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The North East Fraud Forum (NEFF) has discussed new plans to expand its anti-fraud work and build a fraud-busting institute. The forum, whose members include regional police forces, businesses and academics, is currently a not-for-profit organisation set up five years ago to raise awareness of new scams and frauds for local businesses. It also hosts fraud awareness seminars on counterfeiting and money laundering.

Speaking to The Journal, the NEFF said it has applied for European funding to build an anti-fraud institute in the region. Chairman Alan Brown said: "We've identified the problem, we want to do something about it and if we can get the funding to support the notion of eliminating fraud using technology developing more awareness then we'd like to be able to do it because there are scientific solutions to some of these problems."

The NEFF, which was the first such regional forum whose model has since been replicated in nine other regions in the UK, is also considering a request for funding of £600,000 to take its fraud awareness seminars to Europe.

_{(Source - complianceonline.co.uk 10 September 2008)}

The director of the Fraud Prosecution Service for England & Wales has said that victims of fraud are "lucky" if the incident is investigated and more specialist police officers are needed to boost prosecutions, according to a BBC report.

David Kirk told the BBC that the number of fraud squad officers has fallen from 600 to 400 over the past 10 years and although improvements are in the pipeline - including the launch of the National Fraud Strategic Authority next month and the addition of 40 specialist officers at the City of London Police - he said that fraud investigation is a low priority for police in the UK and that fraud should not be considered a "victimless" crime.

"If you were an ordinary member of public taking your complaint about a fraud along to your local police station, you would probably find that you would not get much response - you would have to be quite lucky to get it investigated", he told the BBC, blaming budget cuts for the low priority.

Mr Kirk said fraud crime is on the increase, not least due to the current economic climate which has been blamed for the increase in mortgage fraud and boiler room scams.

_{(Source - complainceonline.co.uk 12 September 2008)}

On 12 September 2008, HM Revenue & Customs (HMRC) published (http://www.hmrc.gov.uk/mlr/mlr8.pdf) a revised MLR8 guide to the prevention of money laundering and terrorist financing (revised Guide).

The revised Guide is dated August 2008 and it updates the previous MLR8 guide which was published by HMRC in December 2007. It has been approved by Kitty Ussher, Economic Secretary to HM Treasury, as "relevant guidance" for the purposes of the following:

The Proceeds of Crime Act 2002 (POCA).

The Terrorism Act 2000.

The Money Laundering Regulations 2007.

The Transfer of Funds (Information on the Payer) Regulations 2007 (SI 2007/3298).

The revised Guide is intended to provide relevant businesses which are supervised by HMRC with comprehensive guidance on implementing the legal requirements for measures designed to deter, detect and disrupt money laundering and terrorist financing. It includes industry sector specific guidance, including for high value dealers, bureaux de change and money transmission businesses. It is based on and, where appropriate, replicates the Joint Money Laundering Steering Group (JMLSG) guidance for businesses regulated by FSA.

The revised Guide incorporates amendments including in relation to the following:

Senior management responsibilities (section 4).

Identifying companies and their beneficial owners (sections 7.8.1, 8.2.2 and 17.2).

Financial restrictions (sections 2.2.5, 7.14, 15.6, 19.6 and 20.13).

The addition of guidance for trust or company service providers (appendix 10).

These (and the other) amendments are briefly outlined in a note (http://www.hmrc.gov.uk/mlr/mlrguide.htm) published by HMRC to accompany the revised Guide.

_{(Source - HMRC 12 September 2008)}

Money Transfer businesses in Bradford are getting their businesses moving again following a co-ordinated operation last week led by the Serious Organised Crime Agency (SOCA) which saw visits to more than 40 money transfer businesses in the city.

Over a three day period, SOCA made visits to pre-identified MSB's without giving any prior warning to the business owners. Officers from HM Revenue and Customs and the local police were also in attendance during each visit. Working on the basis of warrants issued by Doncaster magistrates. SOCA were able to enter premises unhindered and were able to seize and copy all material found for subsequent examination off site which were returned to all relevant business owners within 24hours.

100,000 in cash was seized during the raids, most of this money was returned to the business owners without further action.

Sources within SOCA have indicated that they have informed and initial picture of what the operation has revealed. They have noted that:

1. A number of the MSB's visited were not registered with HMRC (in direct contravention of the 2007 Money Laundering Regulations).

2. Many businesses were failing to comply fully with obligations imposed under the 2007 MLR's (in particular, businesses could not demonstrate that they had trained their staff adequately).

3. There were concerns about the extent and quality o f record keeping.

4. There was evidence that businesses did not have procedures in place which allowed them to identify suspicious customer behaviour - nor did they know how to report the suspicious behaviour to the authorities.

SOCA will now review all the information they have gathered to see what action should be taken against individual businesses, it looks likely that criminal charges will follow.

A member of the European Parliament for the East has been arrested on suspicion of obtaining money by deception.

Tom Wise, 60, from Leighton Buzzard in Bedfordshire was questioned by police on Friday about an alleged fraud. He was later given bail. The former policeman who was elected for UKIP had the party whip withdrawn in 2007 and now sits as an independent.

Mr Wise, who represents Suffolk, Essex, Norfolk, Cambridgeshire, Bedfordshire and Hertfordshire, was elected in 2004. He is one of seven MEPs covering the east of England. A spokesperson from Bedfordshire Police told the BBC a man was arrested for obtaining money by deception and has been released on bail pending further inquiries.

_{(Source: http://news.bbc.co.uk/1/hi/england/7467318.stm)}

The Fraud Advisory Panel has warned that the current economic downturn may prompt an increased risk of corporate financial crime.

Publishing its annual review, the independent watchdog listed high interest rates, more restrictive covenants and forced asset sales as a condition of raising finance as key drivers of fraud in a downturn. It added that linking high-level remuneration to financial targets can also incentivise
business fraud.

Ros Wright, chairman of the Panel and a former director of the Serious Fraud Office, said that worsening economic conditions can often lead to an increase in financial crime.

"The pressures caused by tighter access to funds can lead some senior executives to forge their way to capital gains. Over-valuing assets is a common scam," she said.

The Panel’s annual review also highlights a new risk of deliberate misreporting in areas such as the environment and ethical sourcing. With organisations increasingly expected to display greater social responsibility, there is potential scope for dishonest business executives to gain financially by manipulating these indicators.

Wright said that it is vital for firms to create an anti-fraud culture where each employee has a responsibility for fraud prevention and detection and all boards of directors supply clear standards and strong leadership.

“Effective prevention strategies have never been more important and will save many companies from ruin if fully implemented. It will also help avoid a re-run of what happened during the last downturn in the early 1990s, which saw major fraud cases such as Polly Peck, Maxwell and BCCI,” she said.

_{(Source – complianceonline.co.uk 18/06/2008)}

A man from Blackburn who used more than 100 fake identities to commit fraud and launder money has been ordered to pay back over £750,000.

According to the Blackburn Citizen, Daniel Lawrence, 28, used the fake identities to steal almost £1 million before he was arrested last January when police raided his print business, Print Inspiration in Blackburn.

Lawrence was earlier this year sentenced to six years in prison after pleading guilty to 33 offences of fraud and money laundering.

Following the sentencing, Lancashire Constabulary's Proceeds of Crime Unit put forward an application to confiscate the proceeds from his crimes. And a judge at a hearing at Manchester Crown Court this week accepted Lawrence had benefited from his criminal conduct to the value of £1,276,481.21 and was ordered to pay £776,481.21 within six months or face a further four and a half years
prison sentence.

Last year police searched properties in Blackburn, Colne, Preston and Manchester as well as Print Inspiration where they discovered scores of false cheque books and credit cards, which he had used to carry out his frauds.

He lived both as Robert Ikunnah, a Nigerian immigrant living on benefits and as Daniel Lawrence, a successful businessman driving a BMW M5 tourer with a private registration. He even took driving tests under his aliases to give them more credibility.

Police were alerted when Lawrence set up unit trust funds using his own bank accounts before changing the direct debit details to those of major companies, believing they would not notice small amounts leaving their accounts.

At his peak Lawrence claimed £716,000 in fictitious VAT receipts from HM Revenue and Customs. He also set up 208 separate bank and credit card accounts through which he was able to gain £200,000 in loans from banks and more than £40,000 from other outlets such as loan companies.

After leaving court, financial investigator DC Stuart Haigh said: "Lawrence is a very intelligent and ingenious criminal who targeted banks, the Government and public companies. As this case shows, people will not profit from crime in Lancashire."

He added: "The Proceeds of Crime Act is one of many tools we are using to come down hard on offenders, it has given police powers to strip criminals of assets acquired through crime. In most cases the main motivation of organised criminals is financial gain and therefore this is an area in which we can hit the criminal hardest."

_{(Source – complianceonline.co.uk 20/06/2008)}

A Hertfordshire man who made £200,000 from trading illegally and laundering the proceeds has received a 15-month prison sentence. Johnny Connors, of Watford Road in Chiswell Green, pleaded guilty to laundering criminal property derived from rogue trading and tax evasion. He tried to deposit more than £20,000 of stolen money into a bank account.

His crimes were of a tawdry sort. He pressurised consumers into hiring him to lay down garden paving before charging them exorbitant fees for substandard work.

Police arrested him at Heathrow Airport on his return from a stay in Dubai. As well as his jail term, he has to satisfy a confiscation order awarded against him for £200,000. If he fails to come up with the loot, he will have to serve a further
default sentence of two years and six months. Under the UK's draconian legal system, a judge set his target without recourse to a jury. If he appeals against the target, he will still find himself deprived of such access.

_{(Source – Complinet 19/06/2008)}

Companies and executives suspected of fraud would face shorter investigations and a better chance of cutting deals under US-style proposed reforms due to be unveiled in a report this week.

The plans - drawn up by Jessica de Grazia, a former US prosecutor - have already triggered reforms at the Serious Fraud Office that could turn into the biggest in the organisation’s 20-year history, say investigators and lawyers.

The long-awaited report is a key test of the credibility of the SFO’s flagship role in tackling fraud, amid criticism over sprawling cases, failed high-profile prosecutions and political
pressure on it.

One SFO insider said the report’s recommendations drew extensively on the experience of the US, where cases are generally resolved more quickly and many suspects plead guilty to win jail sentence reductions.

The insider said: "I don’t think it pulls any punches. But I think what she’s saying is something that everyone who’s involved in prosecuting these kind of cases must take seriously."

The report, commissioned more than a year ago as part of an ongoing government review of how fraud is tackled, will call on the SFO to cut investigation times that can run into many years, people familiar with it say.

It will recommend building on modest moves towards doing deals on sentencing in exchange for early guilty pleas. It will also push for a paring down of the epic document disclosure processes that another SFO insider said plagued complex financial cases.

_{Source - Financial Times, 08/06/2008}

UK companies are falling behind the international trend for specialist fraud personnel, according to the results of Grant Thornton’s annual International Business Report. Some 37% of private UK companies employ specialists to detect fraud, compared with a global average of 45% and as high as 59% in the US, the survey found.

Grant Thornton said 7% of UK businesses had increased staff involvement in fraud prevention in the past 12 months, which it said was "one of the lowest rates in the world"
compared with the global average of 12%.

The survey, which covered 7,400 owners and senior managers across 33 countries, identified the Philippines as the most fraud conscious, with audit specialists in place at 72% of private firms. However, the UK was not at the bottom of the league table with Japan and Denmark recording 17% of businesses with staff resources dedicated to preventing fraud.

Phil Crooks, Head of Assurance Services at Grant Thornton, said it was a well documented fact that in times of economic downturn fraud tended to increase and the figures should be "a wake-up call" for both the accounting industry and business owners.

"History shows that fraud is more prevalent when times are hard. Prevention is better than detection...The coming 12 months will be a good indication of whether the UK has been
complacent, or has matched the threat with the appropriate level of resource."

Grant Thornton said internal controls are the most common fraud detection measure but UK companies are still ignoring the importance of internal audit. "People often associate fraud with the theft of cash or assets, but it is far more common to see accounting fraud caused by managers under pressure to deliver a certain result".

"Unfortunately many UK firms are unsure of the appropriate prevention and detection methods to handle common business fraud, particularly misappropriation of company assets and resources as a result of inadequate separation of duties, and misplaced trust on key personnel," Mr Crooks said.

_{(Source - complianceonline.co.uk, 02/06/2008)}

According to the Office of Fair Trading (IFT) some 3.2m people in the UK are affected by scams each year. The total cost to these victims is estimated to be £3.5bn. The table below shows the most common scams and how much they cost in total as well as the average cost per victim.
 

[1] Victims are persuaded to give their bank details in order to receive large amounts of money from Africa. Their accounts are then cleared.
[2] Having won a ‘free holiday’, victims then have to pay for flights and extras – and do not get to go where they want, when they want.
[3]Recipients received a letter promising predictions that will ‘change their lives forever’, provided they pay a fee.
[4] Consumers accidentally use software that connects them to the internet using an expensive telephone line.
[5] Victims are placed on a waiting list for a ‘valuable free gift’ if they spend >£20 on the scammer’s website. Those at the top of the list only receive their ‘gift’ when further 100 people have spent enough to be signed up.

_{[Source: Office of Fair Trading]}

Trust me, I’m an Airline Pilot

Consumer confidence in professions in the UK shows that he most trusted professionals are airline pilots. Research carried out in 2007 by Reader’s Digest show that 95% of those questioned have trust in the people who fy them to their business and holiday destinations. By contrast the least trusted people in the UK (with only 7% questioned indicating that they trust them) were politicians - one percent below Car Salesmen. Interestingly, Cabbies and lawyers are on equal footing at 48%.  However, the same survey showed the UK’s most trusted brand as British Airways. It remains to be seen what effect the new Heathrow Terminal Five will have on this in 2008!

The league table of professionals is a follows:
 

Middle-class Crime

If one believes the various Daily Mail articles throughout the year the traditional middle class folk demons would appear to be are either hooded youths or gun-toting drugs dealers. However, the readers of that publication could do well to look to their own.

According to research by Keele University, petty crime amongst the middle classes is rife. A study carried out in June 2007 by Professor Susanne Karstedt and Dr Stephen Farrall, indicated that some 61% had committed a crime against their employer, the government, or a business. Those questioned admitted to the following misdemeanours:

Paid cash-in-hand to avoid tax 34% 
Kept cash when ‘over-changed’ 32% 
Purloined something from work 18%  
Avoided paying TV icence 11% 
Padded out an insurance claim 7%
Asked a bureaucrat friend to ‘bend the rules’ 6%
Misclaimed benefits 3%

_{[Source: Keele University]}

From the website of the Council for British Archaeology (CBA):

"The CBA has been alerted to a system whereby financial fraud is conducted through the use of charity bank accounts. Apparently an organised gang in southern England is working its way through the Charity Commission website of charities, identifying charities that have websites. It then accesses those websites to identify charities that encourage people to apply to become members on-line or make donations by direct debit. These charities give their bank account numbers and sort codes on their website in order to facilitate direct debits. The fraudsters then use these details to set up direct debit payments from the charity bank account in order to to buy insurances online - for which they automatically receive a valid certificate of cover online. These can then be used for purposes of identity theft. Organisations should therefore be aware of the potential danger of disclosing bank details online and of the possibility of fraudulent direct debits arrangements being established on their accounts. Some small charities may feel that direct debits are not appropriate for them, in which case it would be useful to instruct their bank that none are to be established. Regular checking of bank statements for unusual items is, of course, good practice."

Council for British Archaeology
St Mary's House, 66 Bootham, York YO30 7BZ,
United Kingdom.
Company Limited by Guarantee, registered in England 1760254. Registered Charity 287815.

Click on the link below to view the latest ACPO report entitled: "The Nature, Extent and Economic Impact on Fraud in the UK".

The report was produced in February 2007 for the Association of Chief Police Officers' Economic Crime Portfolio by Michael Levi, John Burrows, Matthew H. Fleming, and Matthew Hopkins with the assistance of Kent Matthews.

Follow the 10 Point Plan to Combat Economic Crime:

1. Have in place an anti-fraud policy which is easy to understand and circulated throughout all employees of your organisation. Maintain a momentum.

2. Have a nominated team within your organisation which is responsible for all fraud issues, risk management and investigations.

3. Promote systems within your organisation to detect fraud.

4. Adopt appropriate controls and have in place a fraud response plan.

5. Consider fraud as a business risk, take it seriously. Focus on prevention.

6. Provide fraud awareness training for all ensuring an alertness to the indicators of fraud.

7. Install an effective 'whistleblowing' policy. Reward efficiency and reduction in losses.

8. Don't recruit fraudsters in the first place; know your customer/client/employee.

9. Involve and seek advice from your Economic Crime Unit right from the outset or detection of a fraud.

10. Be tough, punish offenders.