Three key takeaways from the 2024 Fraud Conference

26 March 2024

On this leap year’s bonus day, more than 150 delegates headed to the Royal College of Physicians in London for this year’s Fraud Conference. Hosted by the Fraud Advisory Panel, INSOL Europe and R3 and chaired by Arun Chauhan, Director, Tenet Law Trustee, Fraud Advisory Panel, the event brought together law makers, insolvency practitioners, counter fraud specialists and academics to discuss the latest trends, innovations and developments in tackling economic crime.

In this blog, we uncover three key takeaways from what was another engaging R3 event.

1.      Our on-demand lifestyle is convenient, but can leave us open to risk

Living in today's fast-paced world, where everything is just a click away, has undoubtedly brought incredible convenience to our day-to-day lives. But the speed of technology has also made us more susceptible to fraud, a point raised by Oliver Buckley, Professor of Cyber Security, in the first session of the day.

One growing concern is the accessibility of AI tools for fraudsters. In his talk on AI and deepfake, Professor Buckley focused on the dangers of voice-cloning.

He demonstrated just how easy it would be for bad actors to replicate your voice, your families’ voices, your boss, or your colleagues, to manipulate you or the people around you into giving out personal information or moving money. In one example, he spoke of a CEO, convinced on a Zoom call to transfer funds by his CFO, only to later find he’d been defrauded using deep fake and voice cloning.

The session was a stark reminder that while everything is at your fingertips, and it’s easy to do everything so quickly, we should always remain alert and embrace secure practices in our tech-heavy lives. One key piece of advice offered was to come up with a verbal password to use with your closest friends and family. If you or your family receive a suspicious call or text from what sounds like a familiar voice, you can ask for the password, just to be sure it’s them.

2.      Risky investments by local authorities have had far-reaching consequences for the public

Since 2021 six local authorities have declared their forecast income is insufficient to meet their forecast expenditure for the next year, and nearly one in 10 councils in England have warned they will be in the same position in the next 12 months. But the source of these financial woes appear to trace back as far as 2010 when the Government announced plans to disband the Audit Commission, so says Alan Bryce, Non-Executive Director at the Tenancy Fraud Forum in a panel discussion on local authority financial distress. The reduction in quality audits reduces transparency and oversight of a Council’s financial activity.

The discussion delved into the recent case of Thurrock Council, which suffered substantial financial losses after investing £655m in solar with the collapsed firm Toucan Energy. But the key takeaway from the session was the uncomfortable reminder that financial mismanagement by these councils has far reaching consequences on the public.

The case of Thurrock Council serves as a stark example, recently passing a budget leading to an 8% increase in council tax starting April. Similarly, Birmingham, which issued a section 114 notice in September last year, is set to raise council tax by 21% over two years.

But the financial burden on the public doesn't end with tax hikes. Both Birmingham and Thurrock councils are implementing significant cuts, with Birmingham facing £300 million in cuts and Thurrock outlining £20 million in savings, on top of the decision to shelve several major infrastructure projects.

The undeniable consequence is that the public bears the brunt of these disastrous decisions, facing both increased financial burdens and the loss of essential services. As local authorities grapple with the aftermath, it becomes increasingly obvious that the repercussions of their choices are harmful to us all, affecting the everyday lives of the communities they serve.

3.      Questions remain around whether the Economic Crime and Corporate Transparency Act went far enough

The long-awaited Economic Crime and Corporate Transparency Act received Royal Assent on October 26^th 2023, marking a pivotal moment for tackling fraud in the UK. Home Office representative Penny Dunbabin's afternoon talk delved into the Act, with a particular focus on the section addressing the failure to prevent fraud. It was fantastic to hear how the legislation will work in practice, and Penny’s key point was that planning ahead is essential; prepare for fraud and know how you will handle it should the worst happen.

The following panel discussion ‘The near future of fraud’ shed light on the Act's efficiency, with panellists debating whether the Act, as well as the Online Safety Bill, adequately address the loopholes open to fraudsters.

While the panellists collectively agreed that the Act is a foot in the door towards eradicating fraud, concerns were raised about its effectiveness. Lana Sinelnikova, Chief Compliance Officer at Kraken UK, emphasised the need for time to gauge whether the failure to prevent fraud offence would be a true catalyst for change or merely become another box-ticking activity.

There was unanimous agreement among the speakers that the threshold applying the new offence solely to "large" organisations, while exempting small and medium-sized corporates, was unnecessary and sparked significant parliamentary debate.

We were also pleased to see James Gliddon, Partner at Foot Anstey, speak about the necessity for increased collaboration between the public and private sectors, a point R3 has long-called for, and mentioned in our 2022 fraud paper.

While the Act goes some way to strengthening existing powers, the key takeaway of the session was that its ultimate effectiveness in preventing fraud remains uncertain. We will need some time to observe whether the Act proves sufficient or if additional legislation will be required to effectively tackle fraud in the UK.