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Case Studies

Charters against fraud

Retail banking, telecoms firms and the dozen or so professional accountancy bodies in the UK have each signed charters to – voluntarily, without any sanctions if they don’t do things – do more about fraud in the next couple of years.

To take the accountancy bodies first, they will create a ‘toolkit’ for accountants that might include: fraud training, guidance to identify ‘red flags’ in their clients and work for them, signposting to useful sources of fraud information; a fraud flyer suitable for clients; and better victim support. That’s among the ‘actions’ in an accountancy sector ‘Fraud Charter’, signed by the sector bodies.

The Government will commission an accountancy sector fraud intelligence brief that identifies major fraud risks. The accountancy sector and law enforcement will work together to see that threat information is shared between police and the sector. Also proposed is a ‘a cross sector education strategy’ and ‘an open dialogue’ between Companies House, and the accountancy sector. This matters as part of counter-fraud reforms of Companies House, as fraudsters may misuse the details of accountancy firms as they try to gain legitimacy by falsely using an accountancy firm’s address as their registered office address; or y falsely claim to have had their accounts prepared or audited by an accountancy firm.

As background, as the document points out, fraud now represents over a third of all UK crime. While little of that fraud may involve an accountant or the accountancy sector may be small, the role that an accountant plays can be important. Control of an organisation’s finances makes an accountant a potential target for fraudsters; as trusted advisors, accountants or accountancy firms can be the victim of impersonation fraud where a fraudster is looking to add legitimacy to a scheme; and unscrupulous accountants with access to client monies, bank account and/or financial records have an opportunity to commit fraud that others would not, and to become ‘professional enablers’, as aired at the recent London Fraud Forum annual conference; and accountants are ideally placed to identify fraud and warn their clients about it.

At the ICAEW (Institute of Chartered Accountants in England and Wales) Sophie Wales, Director of Trust and Ethics said: “As the techniques used by fraudsters continue to evolve, it is important for ICAEW to work with the government to improve understanding of the fraud threat across the sector and help strengthen trust in the profession. We are proud to be a signatory to this charter and look forward to working with our partners to fulfil these important actions.”

Similar charters have been published for retail banking and telecommunications sectors. As for telecoms, the charter (signed by seven telcos) speaks of data on sources of scam calls to be shared by the industry; and similarly for data sharing, work on whether the 7726 database can be used more against smishing; and more regular and rapid data-sharing more generally, for what the charter calls a ‘more agile approach’. For example, telecoms firms will look to identify repeat fraudsters, and to pass ‘actionable evidence’ to the police.

As for the risk of identity theft and telecoms subscription fraud, a pilot Dynamic Direct Debit system will be run, to make three-way authentication and authorisation at the point of sale between a customer, their bank and the telecom firm.

And as for the retail banking charter – signed by the trade body UK Finance on behalf of banks – some seven ‘actions’ are listed, again largely to do with raising awareness, doing more for victims, and gathering more of an ‘evidence base’ – in the case of banks, about APP (Authorised Push Payment) fraud, and ‘money mules’. UK Finance for example ‘will co-ordinate the banking sector to capture a consistent set of data points at the point of a fraud being reported or identified’.

Progress on all sector charters will be overseen by the Joint Fraud Taskforce Board, made up of Government, the private sector, regulators, law enforcement and victim representatives. The accountancy sector is represented on the Taskforce by Iain Wright, Managing Director, Reputation and Influence for ICAEW. The Taskforce was set up in early 2016 by the then Home Secretary Theresa May.

More on counter-fraud in the December print edition of Professional Security magazine.


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