Tide, the leading financial business platform representing over 500,000 SMEs in the UK, is urging the government to introduce a new levy to fund and train additional police officers to combat Britain's escalating fraud epidemic.
The government unveiled its new Fraud Strategy. However, Tide, utilized by more than 9% of the country's small businesses, asserts that creating a National Fraud Squad with 400 new investigators is "nowhere near enough" to tackle the staggering 2.7 million scams that target the British public each year. In the first half of 2022, criminals managed to defraud victims of £610 million through various scams, according to UK Finance, a trade association for banking and financial services.
As most scams involve Approved Authorised Payment (APP) Fraud, where victims are deceived into transferring funds to fraudsters, Tide is proposing implementing an anti-fraud tax on the value chain to generate the necessary law enforcement capacity. This tax would apply to social media and telecom companies, the primary sources of scams, and faster payment transactions. It would aim to provide funding for UK law enforcement agencies and make it compulsory for them to investigate and prosecute scammers, including those operating from overseas, under a zero-tolerance policy.
Tide further recommends the mandatory reporting of all instances of fraud by financial institutions.
Oliver Prill, CEO of Tide, emphasizes the harm caused by fraud, which strains small businesses, consumers, and financial institutions, ultimately damaging the UK's economy. He believes that the target of reducing fraud by only 10% by the end of 2024, alongside an additional 400 police officers, falls significantly short of addressing the magnitude of the problem and the resulting consequences. Therefore, Tide is calling for implementing a tax to fund comprehensive action against this pervasive issue in the UK.
Tide has put forth four policy recommendations:
- Zero-tolerance approach to law enforcement policy funded by an anti-fraud tax.
- Mandatory data sharing.
- Re-evaluation of rules requiring financial institutions to reimburse all victims of authorized fraud.
- Plan to offer customers more options regarding the level of fraud protection they desire.
Oliver believes that the government's new fraud strategy is a positive step, but it needs to be more ambitious to combat the lucrative fraud industry in the UK. Fraudsters from all over the world are drawn to it. Oliver suggests investing the reimbursement funds into fraud prevention and prosecution rather than guaranteeing it to the criminals. Tide is confident that its policy recommendations can make a significant impact in the fight against fraud.
Emphasizing the Necessity of AML Compliance
The news highlighting Tide's call for a tax on social media and telecoms companies to combat the UK's fraud epidemic intersects with the realm of AML compliance. AML regulations aim to prevent illicit financial activities, including fraud, by enforcing stringent measures to detect and deter money laundering and terrorist financing.
Tide's proposal reflects the pressing need for comprehensive measures to address the rising tide of fraud in the UK. By advocating for an anti-fraud tax on the value chain, Tide emphasizes the importance of funding law enforcement efforts and enhancing the capacity to investigate and prosecute scammers, both domestically and internationally. This aligns with the core principles of AML compliance, which seek to safeguard the integrity of financial systems and protect individuals and businesses from financial crimes.
Furthermore, Tide's emphasis on mandatory data sharing and the reassessment of rules regarding compensation for victims of authorized fraud aligns with AML compliance requirements, which emphasize the importance of robust information sharing and due diligence practices to identify and mitigate potential risks.
The intersection of Tide's proposals with AML compliance underscores the interconnectedness of efforts to combat fraud and money laundering. By addressing the financial aspects of fraud through an anti-fraud tax and advocating for stronger measures, such as mandatory reporting and investigation, Tide seeks to fortify the overall AML framework and create a more resilient financial ecosystem.