COMBATING ECONOMIC CRIME
GIVING FRAUD PREVENTION THE CREDIT IT DESERVES

CIFAS

The need to tackle fraud remains critical. As UK Finance reports that consumers have lost over half a billion pounds to fraud in the first half of 2023, it has never been more important to stop criminals in their tracks – at the earliest opportunity.

While doorstepping residents remains a favoured tactic for opportunistic criminals, the face of modern fraud is online and digital – exploiting vulnerabilities through fake emails and websites, and bogus social media messages and SMS. This often makes it even more difficult to detect and report fraud.

However, what we are saying is nothing new. We all know we want to combat fraud, but how do we do it? At Cifas, we have spent the last 35 years helping our 700-strong membership save billions of pounds.

The time is ripe for the credit industry to work with other industries and the public to take data-sharing to the next level, and turn the tide on modern-day fraud and financial crime.

Our not-for-profit organisation was initiated by the consumer credit industry, set-up as a vehicle to exchange fraud data in the analogue age. Over the years, we have developed and expanded our services to meet the changing needs of the credit industry and wider sectors, which each benefit from sharing their fraud risk data and collective expertise.

Further evolving this platform for the digital era is a key priority for us, and the time is ripe for the credit industry to work with other industries and the public to take data-sharing to the next level, and turn the tide on modern-day fraud and financial crime.

Why now? Because the opportunity is clear. The UK Government Economic Crime Data Strategy, announced in the Economic Crime Plan, presents a once-in-a-generation chance to create the infrastructure and framework to bring about a step-change in prevention and detection.

Done right, this strategy could unlock the fraud prevention potential of a crime costing the UK upwards of £200 billion per annum. That figure alone underlines the significance of the challenge, and why a collective approach is needed to unlock the power of data and reduce economic crime. The conditions are right for this next step forward.

Firstly, while the data landscape across the UK’s anti-economic crime community is fragmented, considerable strides have been made in data-networking and analytical capabilities, which offer a new-found ability to bridge this disparate landscape.

Secondly, the current Data Protection and Digital Information Bill, if passed into law, provides further legal clarity around the sharing of data for the purposes of preventing or detecting crime.

Thirdly, the UK government’s Economic Crime Plan 2, launched in March 2023, rightly recognises the value of data in the fight against economic crime and commits to creating a public-private National Economic Crime Data Strategy to “enhance the exploitation of available data across the ecosystem to better prevent, detect, and pursue economic crime”.

If correctly framed, the Data Strategy has the potential to revolutionise the response to economic crime in the UK and provide a global blueprint for a data-driven response to the problem. To do so, it needs to move us from siloed, information-sharing responses to a dynamic, networked collaborative data analytics ecosystem – one that is realistic, cost-effective and appropriate for the UK context.

Building the pathway to this vision will not be easy and requires a multi-disciplinary approach drawing in expertise from across financial crime, data science, digital trust and data privacy fields. Only then are we better positioned to build a data ecosystem with the correct system architecture, infrastructure and governance.

In the UK, we are fortunate to be building from strong foundations, with many examples of mature data consortia and information-sharing platforms including Cifas and others. In short, rather than starting from scratch, we have strong data pooling expertise and governance baked into the system from the start.

What we must do next is better connect and network the landscape. While turning a federated system of data pools into a reality will not be easy, given the considerable strides forward in technical underpinning for data federation, it is not impossible.

And finally, while the UK’s organically grown data systems are a strength, to move forward we must build in a key ingredient from the start – trust. To do so, we need strong system governance to ensure all actors are working to the same high standards of security, transparency and data integrity.

While we have reached the optimal circumstances for building towards a truly data-driven response to economic crime, this will take considerable time, expertise and investment to realise. Given the substantial human and financial cost, it is imperative that we work closely with the credit industry to collectively protect against the rising threat of fraud.