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FCA on online fraud

The UK regulator of the financial services sector the Financial Conduct Authority (FCA) says it’s using data to tackle online fraud faster by scanning about 100,000 websites created every day to identify those that appear to be scams.

Where the FCA identifies fraudulent websites, it says it’s proactive in requesting the website host shut them down, though the FCA does not have the powers to force them to. Between May 2021 and April 2022, the FCA added 1,966 possible scams to its consumer warning list – over a third more than during the same period the previous year.

This forms part of an update on the FCA’s data strategy. The FCA says that it plans to invest heavily in its use of data in 2022/23, recruiting a significant number of skilled roles, across Artificial Intelligence, analytics and data science as well as cloud engineering and digital, adding to the 100 it has recruited since 2020. The recruits will be responsible for improving the quality of the data the FCA collects.

The FCA is using analytics and new sources of data to identify inappropriate financial adverts. Last year 564 adverts were withdrawn or amended, double the number compared to previous years.

After Russia’s invasion of Ukraine in February, the FCA has developed and implemented a sanctions screening tool to support the monitoring of the effectiveness of a firm’s controls in identifying organisations or individuals that have been sanctioned. This has been supporting the FCA’s work with domestic and international partners in response to the war in Ukraine.

The FCA will provide its staff with a dashboard for all the financial companies it regulates and sectors it oversees. This will make it easier to identify and focus on the highest risk cases.

Jessica Rusu, Chief Data, Information and Intelligence Officer, said, ‘Better use of data means we can be more proactive and find and stop harm faster. We are continuing to improve our data, technology and capabilities to act decisively in consumers interests, while making it easier for firms to report to us.’

Background

According to the most recent ONS survey of crime, the Office for National Statistics’ estimates from its telephone-operated Crime Survey for England and Wales (TCSEW) showed that there were 5.2 million fraud offences in the year ending December 2021. That’s a 41 per cent increase compared with the year ending December 2019. Large increases were seen in “advance fee fraud” and “consumer and retail fraud”. This may indicate fraudsters taking advantage of behavioural changes related to the coronavirus (COVID-19) pandemic, such as increased online shopping. For example, advance fee fraud offences included scams where victims transferred funds to fraudsters for postal deliveries.

As for what gets recorded by the authorities, fraud offences reported to the police are collected by the National Fraud Intelligence Bureau (NFIB) from Action Fraud and two industry bodies, Cifas and UK Finance. Action Fraud (the public-facing fraud and cybercrime reporting centre covering England and Wales) reported a 15 per cent rise in fraud offences (to 400,763) compared with the year ending December 2020.


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