Such a state of vigilance is well justified. In its recently published economic crime plan, the government said that as many as one in 15 adults had been the victim of fraud in 2022.
Addressing this is a key feature of the plan, with the government committing to introducing legislation to deter fraudsters.
There can be no doubt that action is required, with the government explicitly categorising economic crime as a threat to our national security.
Fraud’s role in this threat is demonstrated by the sobering statistic that it accounted for 41 per cent of all crime experienced by adults in England and Wales in the previous year.
There are challenges in holding to account companies that do not do enough to prevent their misuse for fraudulent purposes.
The act of fraud is committed in many ways. However, the use of well-established businesses is common, with fraudsters impersonating customers’ banks, for example.
In its fraud report for 2021, UK Finance recorded that bank fraud accounted for approximately £750mn in stolen money.
That is not to say that legitimate businesses do not already do a great deal to prevent services being misused by fraudsters; UK Finance has noted that banks’ security systems prevented the theft of a further £736mn. However, it is also clear that more can be done.
Pinning the blame
There are currently challenges in holding to account companies that do not do enough to prevent their misuse for fraudulent purposes.
Even if those companies are actively complicit in the fraud, bringing a successful prosecution is difficult because of the need to tie the offending behaviour to a person who can be said to constitute the company’s “directing mind and will” – that is, an individual who has the requisite seniority, discretion and autonomy to be said to embody the company.
This is particularly acute in relation to large companies, where complex management structures can make it hard to prove that the relevant individuals had oversight of the activities in question.
These problems saw the Law Commission tasked with finding a solution, and in the summer of last year, it published its recommendations. These included statutory reform of the current basis on which a company’s directing mind and will is identified.
It is unlikely that imposing a requirement on legitimate businesses to prevent fraud will have much of an impact on organised criminals.
