Why fraud awareness is a must!

The IFA highlights the extent of fraud in the UK, and offers some advice on how to avoid becoming a victim

Fraud accounts for almost a third of UK crime; in the past 12 months almost £754 million was lost through fraudulent activities.

As professional accountants we are gatekeepers, and the first line of defence, to prevent illicit funds finding their way into the UK economy. As regulatory compliance will form a significant part of your future career, it is essential that you prioritise not only an understanding of the regulatory landscape, but also knowledge of current ongoing fraud reports. Some examples which will help you to identify potential hazards are:

• According to UK Finance, authorised push payment (APP) scams are a key concern, with customers being tricked into authorising payments to an account that is ultimately controlled by a criminal entity. These scams increased in frequency by 60% and rose 71% in value in 2021 compared to 2020, accounting for losses of over £355 million.

• Data from FTI Consulting meanwhile highlights the issue of Green Fraud, with organised crime targeting businesses by offering fictitious services designed to help them ‘achieve’ net-zero. It is anticipated that these scams will amount to £3.5 billion by the end of the year.

• Employee fraud – most commonly through inventory theft, data theft and cash theft – costs businesses around £190 million annually. What’s more, it takes an average of 14 months for the fraud to be discovered, with dedicated financial controls a key component in tackling the issue.

Combatting fraud

As well as utilising advanced security systems and implementing strict financial controls, accountants must understand the regulatory framework for combatting fraud. The Economic Crime Plan mandates the requirements for tackling economic crime (currently being redeveloped), and there is a separate fraud strategy in development, too. The National Economic Crime Centre provides intelligence sharing and summaries of alerts that your membership body will send to you. The National Crime Agency also provides good guidance and sector-specific reports such as their guide to understanding modern slavery and human trafficking for the accountancy sector.

One final point: not only do you bear ultimate responsibility for accounts, but your ability to legitimise financial transactions can make you a prime target. There are extensive examples of accountants being pressured to sign-off fraudulent activities, as well as many examples of fraudsters impersonating accountants/ accountancy practices, specifically to legitimise their activities. Vigilance is key!

AML Matters is a programme of practically focused webinars that support accounting professionals build their understanding of the anti-money laundering requirements. They provide valuable fraud awareness and counterfraud training. To find out more click here

• Thanks to the Institute of Financial Accountants (IFA) for this article. Go to www.ifa.org.uk

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