Law and the Justice System

What are the 5 key things you need to know?

Our previous blog on this topic (found here: Fraud: ‘failure to prevent fraud' offence - KPMG UK) set out the background to the new ‘failure to prevent fraud’ offence contained in the Economic Crime and Corporate Transparency Act 2023 (“ECCTA”). As a one-line recap, this is where an organisation can be prosecuted under the ECCTA (potentially resulting in a fine) if a fraud is committed by an associated person, for the organisation’s benefit, and the organisation did not have ‘reasonable procedures’ in place to prevent the fraud.

https://kpmg.com/uk/en/home/insights/2024/11/government-guidance-for-failure-to-prevent-fraud-offence.html

The much-anticipated new corporate criminal offence of failure to prevent fraud was introduced by the Economic Crime and Corporate Transparency Act 2023.

Its commencement was conditional on the government publishing guidance and that was issued on November 6 2024, and a regulation was laid before parliament on the same date that will make the offence effective from September 2025.

https://www.ftadviser.com/financial-fraud/2024/11/13/the-net-has-drastically-widened-for-corporate-criminal-liability/

Big businesses have nine months to implement fraud prevention procedures, with the Serious Fraud Office director warning that “time is now running short for corporations to get their house in order”.

Today, the Home Office published its guidelines on the offence of failure to prevent fraud.

UK authorities tasked with preventing fraud "seem not to care" about the people caught up by the fraud, MPs have been told.

At a summit held by the all-party parliamentary group on investment fraud and fairer financial services yesterday (October 31) in Portcullis House, Margaret Snowdon OBE was scathing about the lack of joined-up thinking between various UK authorities and a lack of co-ordination in pursuing the criminals.

Elie Taktouk’s default sentence finally enforced: 8-year term imposed for failing to pay a £4.5 million Confiscation Order

Recovering proceeds of crime from fraudsters can be immensely difficult. The latest asset recovery statistical bulletin records that the value of confiscation order impositions in the financial year ending March 2024 was £307.9 million, yet only £128.5 million was recovered, falling by 28% compared to that which was recovered in the last financial year.

The Serious Fraud Office (SFO) has recovered a further £295,000 from Virendra Rastogi, now known as Vareen Kumar or Veerain Kumarr, who was convicted for an international metal trading scam.

The money was recovered from two pension funds as part of an ongoing proceeds of crime investigation into Rastogi’s assets, which has recovered nearly £6 million to date including from the sale of his Marylebone home and via the seizure of money and assets including valuable watches.

Virendra Rastogi, whose company was advised by political grandees, was jailed in 2008 for a £1bn fraud through a business empire that was ‘rotten to the core’

https://www.thetimes.com/uk/crime/article/fraudster-loses-pension-pot-to-confiscation-order-20-years-later-z0fz8c6tz#:~:text=The%20pension%20pot%20belonging%20to,Office%20(SFO)%20to%20date

The Bill would allow banks to better investigate suspected fraud.

The Department for Work and Pensions are set to be granted powers to request information from the bank accounts of benefit claimants.

The Fraud, Error and Debt Bill will require banks and other financial institutions to share data that may help identify benefit fraud.

According to details from DWP, the legislation will give the Department powers to:

• Better investigate suspected fraud and new powers of search and seizure so DWP can take greater control investigations into criminal gangs defrauding the taxpayer.
• Allow DWP to recover debts from individuals who can pay money back but have avoided doing so, bringing greater fairness to debt recoveries.
• Require banks and financial institutions to share data that may show indications of potential benefit overpayments.

https://insight.scmagazineuk.com/proposed-fraud-error-and-debt-bill-raises-privacy-concerns

The government will bring forward a new Fraud, Error and Debt Bill in this parliamentary session to crack down on fraud in the social security system.

• Fraud, Error and Debt Bill brought forward to tackle fraud in social security system

• New laws to give DWP more powers to catch fraudsters faster and prevent customers from getting into debt sooner
• Bill to include measures to protect vulnerable customers and ensure support goes to those who need it most

Fraud is having a lingering impact on some victims’ mental health, research for Which? has found.

The consumer group commissioned a survey of more than 1,000 people across the UK who had lost money to fraud in the previous two years.

Of those who reported the fraud, just over half (55%) were able to get all their money back – but nearly a quarter (22%) said they received no reimbursement at all.