Half of all reported crime 'is cyber crime or fraud'
Written by Peter Walker
Up to half of all reported financial crime is either fraud or cyber crime, despite fraud being underreported and only one in eight cases being investigated.
At last week’s Personal Investment Management and Financial Advice Association (PIMFA) Financial Crime Conference, City of London Police commissioner Ian Dyson emphasised this point, stating that three quarters of all fraud crimes reported are cyber-enabled – “it’s now a lot easier than robbing a bank and the rewards are far greater”.
It was suggested in one panel session that London has become the money laundering capital of the world, with detection a prevalent challenge as external and internal auditing only picks up four and 16 per cent of fraud respectively, with whistleblowing unmasking up to 40 per cent of issues.
Hywel Jenkins, a partner at Herbert Smith Freehills, stated that whistleblowing reports are a good source of intelligence for firms and the regulators about potential misconduct. “Equally importantly, people feeling confident that issues can be raised without fear of detriment is seen as a key factor in creating the right culture within firms; this is an area of continued focus from the regulators and therefore high up the agenda for firms and their senior management.”
The conference heard that a technological arms race is emerging, as criminals equip themselves with similarly smart systems to financial institutions.
Jon Cosson, chief information security officer at JM Finn, said that while organisations continue to develop their cyber security strategies, it is evident that cyber criminals are focusing their attention to supply chain and clients, which are deemed easier prey.
“Organisations are as strong as their weakest link, criminals and fraudsters are very aware of this; businesses need to think beyond their perimeter and reach out to their clients, educating them and developing verified communication channels.”
Max Bruce, cyber protect officer at the National Fraud Intelligence Bureau, spoke about the cost and scale of fraud, sharing that 741,000 frauds were reported last year, from up to the total value of £2.2b billion in victim losses; with only 35 per cent of reports from individual victims.
He also highlighted that 86 per cent of fraud was cyber-enabled – a third by mobile, 13 per cent via online shopping and 12 per cent by email.
PIMFA chief executive Liz Field said: “Technology is advancing every day, which, if mishandled can be used against us – fraud and cyber-crime is rising and becoming more advanced.
“We will continue to work closely across the industry, including the City of London Police, the National Fraud Intelligence Bureau, the National Crime Agency, the regulators and our firms to help tackle financial crime and help protect clients.”