There are a whole host of banking and financial frauds that can take place against individuals, groups
and businesses. There are of course some that are as a result of ’old school crime’ namely theft of
the card or cards. With the use of modern day ‘contactless’ to avoid the laborious task the criminals
used to have in either forging your signature or having to locate a four digit number that related to a
particular card. Now they can run up to a contactless machine and with the limitation of £40 per
transaction have a nice little spend at your expense.
We have no sympathy for the banks in having to pay for money lost in this way. The savings in not
protecting clients are considerable for the banks but by the very nature of contactess it exposes
customers of the banks to this form of fraud. Of course many of these frauds go unnoticed as there
are very few people who use contactless payments that make a note of what where and how much
they spend. However there is a limitation of the amount of transaction and also how much is in a
particular account to be spent. This form of fraudulent crime is therefore limited but nonetheless
financially painful, embarrassing and time-consuming to deal with for the victim especially if the
bank does not protect them by refunding the money is as it should.
The other end of the spectrum is the criminal working for an organised gang who use email scams to
obtain information on accounts and enable them to switch monies under the noses of the bank. A
client and sometimes with the help unwittingly of the bank or financial institution in order to make
the financial transaction. Whereas with the theft of a card there is a limitation to the fraud when it
comes to large-scale crime against many people, there is no limitation other than the ambition of
What is Financial Crime?
Financial crime is sadly big business. It is incredibly difficult to police and the criminals can use their
knowledge and skills of the technology available in today’s society in order to commit fraud, obtain
funds and close up shop before the relevant authorities are even aware the fraud has taken place.
Despite the ease of committing the financial crimes in the first place the repercussions to an
individual or business that has suffered from crime of this nature, through no fault of their own can
be considerable and if not dealt with promptly, which is not always possible can have financial
repercussions. This is particularly in the case where identity theft has occurred which will have
ramifications over a considerable period of time through the effect it has on an individual’s credit file
and credit history.
Financial crime itself according to statistics is unaccounted for in 88% of cases. With the cost of
financial crime running into tens of billions of pounds each year.
In defence of the financial institutions and indeed of the regulators and financial crime departments
whose job it is to stop these forms of scams and financial losses as a result of crime is they do really
face an uphill battle? Criminals are just cleverer and one step ahead but that is no defence. The
financial system has been developed to save institutions huge amount of money and the regulators
have been set up to oversee this. It is their problem to make sure they are competent up-to-date
and able to fight crime and to protect clients of these banks and financial institutions from fraud and
be at the cutting edge of technology and information in order to avoid a client’s loss.
Would the banks be better at dealing with financial crime if they were the ones who lost out
financially. Yes they would
What are Financial Scams
Financial scams are not just someone stealing a bank card and taking money from account, many can
be elaborately planned and targeted to not only individuals but thousands of people in one fell
swoop. They can be conducted by seemingly legitimate organisations offering seemingly genuine
products and services through to targeted thefts from account.
Boiler rooms schemes
This scam promises investors impressive returns but deliver nothing other than huge losses. Boiler
rooms are set up and normally run by small groups of individuals who contact people by phone or
email offering enormous returns on investments. The only return clients normally receive after
parting with in some cases tens of thousands of pounds is a couple of worthless pieces of paper in
the form of shares for a company that is worth nothing. Remember if it seems too good to be true it
tends to be!
Phishing and Smishing
The more common scams come from criminals posing as either a banking or financial official asking you to either click or provide login or account details. This is a relatively simple crime and can be conducted against thousands of people at the click of a button in sending an email. Fraudsters target thousands of people will go where some will click and provide information making the scam worthwhile to conduct as it enables the criminals to then raid accounts easily. With modern transactions can then procure monies to their own accounts normally in foreign countries at the click of a button.
With the new pension freedoms, scammers were able to set up businesses (legitimately) to exploit loopholes in order to obtain cash from pension funds for those under the age of 55. This has been incredibly successful and with pension pots running into hundreds of thousands of pounds fraudsters have been able to earn considerable percentages in enticing people through the very regulation that should be there to protect them to recover pension pots.
Al of this quite frankly was committed in the open and under the regulators nose!
Unfortunately the reality is anyone under 55 who withdraws the pension faces a tax bill and a hefty one at that.
Home Buying Fraud
Due to the large transactional nature of a property purchase, especially in relation to a deposit for the property, computer hackers will monitor emails between solicitors and clients to enable them to pretend to be a solicitor when the deposit is due. They will then provide banking information that is of course not your solicitors for you to transfer funds to. As such they can steal sums of money that you have transferred yourself.
Again almost a legitimised crime in that firms offering a free trial where a free introductory period is offered in order to obtain card details. Following which after the free trial period you’re tied into a monthly subscription or one-off payment known as ‘continuous payment authorisation’.
You will notice from some of the scams for frauds as detailed above that there is an air of legitimacy about a number of them. Homebuying fraud and phishing you can see as being crimes. Criminals monitoring your transactions to basically steal from you.
However the freebie scams the pension liberation and the boiler room schemes all have an air of legitimacy. This is where financial institutions and indeed regulators offer an incredibly poor protection. We have known many firms and individuals who offered these forms schemes and indeed we provided information to regulators who sadly are so slow to act and therefore do little to protect clients by closing these firms immediately. Instead they go through their bureaucratic processes that of course the fraudsters know will happen and by the time the stable door is closed and in some cases not particularly firmly! the horse has not only left the stable but has been merrily running around the field eating its body weight in grass!