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Shock and Awe - NFA Fraud indicator puts fraud at 73bn GBP

For those for you that have been tracking the NFA’s last estimate was £38.4bn, but the rise is really buried in the detail and largely attributed to the NFA casting their net on UK PLC a little wider and completing more granular analysis.  There is also some interesting comparative finger point for example UK Government sector at £20.3bn, whilst UK Financial Services sector tune in at a mere £3.5bn. Some sectors are clearly doing better than others – and those that are going better seem to be the sectors which the media focus attention on. I also suspect there may be some element of double counting going on here as ID Fraud (£1.2bn recorded against Individuals), also impacts upon other sectors i.e the fraudster impersonates someone to obtain a line of credit. 

But what about the bigger picture where is all leading? Each sector will be linked to a bank account, or financial services product. Fraudsters will perpetrate their crime for financial gain. So theoretically where is all this money flowing - and where do we stand on the money laundering issue?  And more importantly are we building a picture of actionable intelligence for law enforcement to bring prosecutions against the perpetrators? Clearly the NFA’s is banging the drum for the call to action.



Comments: (1)

Bob Lyddon
Bob Lyddon - Lyddon Consulting Services - Thames Ditton 04 April, 2012, 17:01Be the first to give this comment the thumbs up 0 likes

Would this not mainly be benefits fraud? i.e. holding several NI numbers and claiming the same raft of benefits on each one. This number does not seem to have fallen since the Benefits Payment Automation Project from 1999, which eliminated the usage of girocheques and books of foils, on which there was no reconciliation by the Post Office and where the beneficiary name could be easily scrubbed out and typed over - leading to a big secondary market around the pubs and clubs.

Within the BPAP it was openly discussed that the real losses were 6 or 7 times as much as the published figures for benefits fraud at the time (£2 billion p.a. in 1999). For some reason this communications policy seemed to be accepted as normal.

The government diktat, signed I think by Harriet Harman, was that benefits payments should, by 2001, be moved onto a "modern, fast and efficient payment system: BACS", and be made into a bank account.

Since BACS wasn't capacious enough to handle the extra volumes (as well as arguably not being modern, fast or efficient), the project recommendations, from EDS and PwC, gave rise to the creation of Voca and a major investment in NewBacs, overseen by the original IT manager from the DWP Long Benton site in Newcastle.

This solution was deemed preferable politically to Peter Lilley's Single Benefits Card, or a National ID Card, or the replacement of the back-end computers. There was in essence one computer for each benefit, each with its own claimant database, and no reconciliation of the claimant to a central identification database - which would have uncovered the same person claiming multiple times. A complete replacement of the back-end systems was deemed too costly so it was instead decided to try and stem the outflow at the payment system level - and I guess that, if losses were really £14 billion in 1999, then £20 billion now, with inflation, represents a capping - result!

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