Only 15% of BBLS fraud has been investigated in last two years
Only 15%* of The Bounce Bank Loan Scheme (BBLS) fraud has been investigated by the National Investigation Service in the past two years, says Sam Tate, white collar crime partner at RPC, the international law firm.
The Bounce Bank Loan Scheme, common to other Covid related support schemes, was heavily targeted by fraudsters. It was argued by the previous government that it was better to issue funds to businesses through the BBLS than to subject applicants to more stringent fraud checks.
Data released by the Department of Business, Energy & Industrial Strategy has confirmed that The National Investigation Service has, in the two years since September 2020, only opened investigations into £160m in BBLS fraud, whilst £1.1bn in BBLS is suspected to be fraudulent.
Sam Tate says that he expects this figure of £1.1bn in reported BBLS fraud to increase over time.
Under BBLS £46.6bn was distributed to 1.6 million recipients.
There is some variation across financial institutions as to the proportion of defaulted loans comprising suspected fraud but again, these figures are expected to rise as internal investigations continue.
While lenders have reported preventing over £2.2bn of fraudulent applications, it remains unclear as to the total amount of fraudulent funds being successfully recovered.
Adds Sam Tate: “What this shows is not only the huge amount of fraud perpetrated during lockdown but also real inadequacies in systems and controls at many banks, as previously identified in FCA enforcement activity. Where the banks seem to have fallen down is in not adapting and implementing anti-money laundering and fraud checks quickly enough. Now we are left with a mess and there is little chance of recovering lost money.”
“Next time the government needs to be quicker to use all of the resources, including those of the private sector to stop and pursue this fraud at the earliest point.”
“In this case the more egregious and coordinated the fraud, the lesser likelihood of recovery, as many of the fraudsters reside abroad and are members of online criminal gangs. To really tackle the industrial scale of fraud we now see (which makes up 41%** of reported crimes), we need a coordinated approach. This must include authorities in financial centres such as Dubai around e-payments and the increasing the use of crypto to hide ownership.”
“It is also of deep concern that the replacement to Action Fraud, which the government has deemed is not fit for purpose, is not being put in place until some point during 2024. As Rob Jones, the director of the NECC said on Monday in relation to fraud, the current response is “just not good enough.” It remains to be seen if sufficient funding will be put in place to deal with fraud. If not, we will continue to see exponential growth.”
*Investigations into £160m of BBLS fraud, out of £1.1bn in BBLS suspected to be fraudulent
**Rob Jones – director of the NECC, speaking at the Cambridge Financial Crime Symposium on 5 September 2022
