In the wake of the pandemic, bribery, fraud, and corruption offences have risen significantly. Enforcement agencies in the UK have repeatedly made clear that they will not hesitate to act on reports of abuse in relation to the coronavirus pandemic government’s support measures or otherwise.
The latest distributive trade index and the National Crime Agency’s (NCA) National Strategic Assessment of Serious and Organised Crime published earlier this year concludes that the threat to the UK in respect of fraud, bribery and corruption is highly likely to have increased compared to before the pandemic began. No surprises there.
The NCA attributes the increase to the pandemic and the UK’s withdrawal from the EU. Evidently such factors have meant that investigating economic crime has become much more arduous. Additionally, the pandemic has created an environment whereby criminal opportunists can easily take advantage of the situation. Undetected economic crime has increased in the past year as a result.
The NCA found that several factors had contributed to the rise in bribery offences. They found that remote working has played a large part, as it has prevented companies from monitoring staff and supervising employees’ activity. The report also suggested that employees who had been financially impacted by the pandemic may be more inclined to commit bribery offences, for example authorising fraudulent loan applications.
The report notes that ‘the financial risk and damage to the public sector from fraud is demonstrated by frauds linked to the pandemic’, including a new class in the form of ‘furlough fraud’. In March 2021, HM Revenue and Customs (HMRC) said it had opened 7,000 investigations, after being sent more than 30,000 reports of potential furlough fraud. Only 20 of these investigations have led to ongoing criminal enquiries so far – with just five people arrested to date. This is a surprising outcome, given that up to £3.9bn of state money may have been claimed fraudulently or paid in error. HMRC has stated that it is ‘almost certain’ that over half of this has been received by organised criminals.
Meanwhile, the Financial Conduct Authority reported in its latest financial crime monitor that UK banks, insurers and asset managers had reported an increased level of suspicious activity to law enforcement in 2020, indicating that firms are live to a rise in crime and risk of fines and prosecution.
Whilst the Covid-19 pandemic has led to a decrease in crime more generally, economic crime has been, and continues to be pervasive. In terms of enforcement, the Government have pledged an overhaul in combatting such offences, but it remains to be seen what exactly this will involve. Certainly, businesses should continue to focus on risk management, adequate policies and procedures and quality anti-bribery and anti-corruption training for employees. It will be interesting to see how this area develops over the next 12 months.