National Strategic Assessment (NSA) Campaign 2023 – Fraud

Fraud is a prevalent and consistent threat, with all of UK society affected by its economic and social consequences. The UK’s fraud threat is divided into three categories: fraud against the individual, fraud against businesses, and fraud against the public sector. 

It is a realistic possibility that three quarters of fraud perpetrated against the UK is partially or fully committed from overseas using both criminal and legitimate services, and exploiting technology enablers.

Volumes of fraud against UK individuals and businesses fell from the unprecedented levels seen during the pandemic but the financial losses to victims grew in 2022. The gap between all fraud experienced by the public and fraud reported to police remains, with underreporting from individuals and businesses still a barrier to understanding the true scale of fraud.

In 2022, UK individuals continued to be the targets of payment diversion fraud, investment fraud, romance fraud, courier fraud and cheque, plastic card and online bank account fraud.

Criminals involved in fraud leverage social, political and economic events to attract victims and exploit online services, social media and cryptoassets to conduct a wide range of frauds, as well as to conceal their identities and the destination of the proceeds of these crimes. It is highly likely that inflation increased the vulnerability of potential fraud victims as more people looked to save and make money. For vulnerable victims, financial losses to frauds are likely to lead to more serious financial difficulties and psychological harm. 

As criminals committing fraud find it increasingly difficult to circumvent enhanced controls implemented by businesses, they often seek to target consumers through social engineering. Data breaches remain a key enabler of fraud and can be used alongside social engineering. Through harvesting personal and financial information, criminals are able to commit frauds affecting individuals as well as the private and public sectors.

The proceeds of fraud are laundered both within the UK and overseas, with money mules remaining a key enabler. Organised crime groups often use ‘criminal mule networks’, with bank accounts owned by witting and unwitting members of the public, to obscure the source and nature of funds. Criminals are increasingly using online methods to encourage people to become money mules, and it is likely that cost of living pressures will attract a wider range of people to money mule activity. Whilst criminals have developed fraudulent cryptoasset investment schemes to lure victims, they also increasingly use cryptoassets to move and launder the profits of a range of other frauds. Criminals also continue to exploit the near real-time transfers that the Faster Payments System (FPS) provides, to swiftly obtain payments from their victims and launder the proceeds of fraud.

The UK’s tax system is a target for organised criminals. Attempts to defraud the Exchequer or profit from illicit trade are seen across a range of tax regimes including through smuggling, non-payment of taxes and false claims for tax repayments. About £5.2 billion of the tax gap (the difference between the theoretical tax total and the amount actually paid) is attributed to criminal attacks. In March 2022, the creation of the Public Sector Fraud Authority (PSFA) was announced. Its purpose is to work with departments and public bodies to understand and reduce the impact of fraud against the public sector.