Occasional Paper
Royal United Services Instute
for Defence and Security Studies
The Silent Threat
The Silent Threat
Royal United Services Instute
for Defence and Security Studies
ii The Silent Threat
190 years of independent thinking on defence and security
Royal United Services Instute
for Defence and Security Studies
Whitehall
>.
Contents
Recommendations for Policymakers ix
Introduction 1
I. Fraud and UK National Security Priorities: Identifying Intersections 5
II. The Fraud–Organised Crime Nexus 19
III. Fraud and Terrorist Financing 29
Conclusions 43
Acknowledgements
Executive Summary
F
1
2 and failures in the response
3
The Silent Threat
Recommendations for
Policymakers
Recommendation 1
Recommendation 2
Recommendation 3
Recommendation 4
Recommendation 5
Recommendation 6
Recommendation 7
Recommendation 8
x The Silent Threat
Recommendation 9
Recommendation 10
Recommendation 11
fraud disruption opportunities.
Recommendation 12
Recommendation 13
Introduction
‘F
1
2
3 and has led industry experts
at that time.
Raconteur
detected and reported fraud only represents a small fraction of actual occurrence of fraud.
>,
Fraud: Time to Choose – An Inspection of the Police Response to Fraud
The Silent Threat
media
• Leadership
• Funding
• ‘Whole of system’ response
intersection
The Times
Daylight Robbery: Uncovering
the True Cost of Public Sector Fraud in the Age of COVID-19
Wood, Keange, Ditcham and Janjeva
• Working definition
11 and the Fraud
12
Fraud: Time to Choose.
4 The Silent Threat
• Legal definition
13
This paper focuses on the
RUSI
Occasional Papers
White Collar Crime
I. Fraud and UK National
Security Priorities: Identifying
Intersections
T
it is an affluent
failures in the response needed to deter
The Silent Threat
• protect our people
• project our global influence
• promote our prosperity
National Security Strategy and Strategic Defence and Security
Review,
crime threat.
Naonal Security Strategy and Strategic Defence and Security Review 2015: A
Secure and Prosperous United Kingdom
Naonal Security Strategy and Strategic Defence and Security Review 2015.
National Security Strategy and Strategic Defence and Security Review 2015.
Wood, Keange, Ditcham and Janjeva
People
21
22
23
Fraud Against Individuals: The Silent Threat
This makes fraud the most
The
Naonal Security Strategy and Strategic Defence and Security Review 2015,
Ibid.
Ibid.
The Silent Threat
31
32
33
Spending Review 2020
Data Insider
BBC News,
Home Office, The Scale and Nature of Fraud: A Review of the Evidence
Wood, Keange, Ditcham and Janjeva
Box 1:
*
Measures
†
payment fraud,
‡
§
¶
**
*
Acon Fraud is the UK’s central fraud reporng hub. Stascs taken from Acon Fraud’s 2019–20 crime trends data notes 381,572
reports of ‘cheque, plasc card and bank account fraud’ reported to Acon Fraud, Cifas and UK Finance collecvely in that period,
making it the most reported fraud type by volume. See Acon Fraud, ‘Fraud and Cyber Crime Naonal Stascs’, 6 October 2020,
<www.aconfraud.police.uk/data>, accessed 5 January 2021.
†
See pay.uk, ‘Conrmaon of Payee’, <hps://www.wearepay.uk/conrmaon-of-payee/>, accessed 6 October 2020.
‡
An unauthorised fraudulent transacon is when the account holder does not provide authorisaon for the payment and the
payment is insgated by a third (criminal) party.
§
See UK Finance’s annual ‘Fraud – The Facts’ reports at <hps://www.uknance.org.uk/>, accessed 19 August 2020.
‖
Author video interview with nancial sector fraud experts, July 2020.
¶
In an authorised push payment fraud, the genuine customer is tricked, oen using sophiscated social engineering techniques,
into making the payment themselves to another account which is controlled by a criminal.
**
UK Finance, ‘Fraud – The Facts 2020: The Denive Overview of Payment Industry Fraud’, March 2020, p. 5.
The Silent Threat
leadership of the National Security Secretariat,
sector, e-commerce, social media and telecommunications industries.
Recommendation 1
Fraud: Time to Choose
security response.
Wood, Keange, Ditcham and Janjeva
The Fraud–Cyber Interface: A Marriage of Convenience
response.
literature,
cross-disciplinary operational response. The current operational response to fraud continues to
system
>,
44.
Current History
The Silent Threat
Recommendation 2
and should lay out a
data for fraudulent purposes.
Wood, Keange, Ditcham and Janjeva
Recommendation 3
Prosperity
per annum.
UK economic security and prosperity.
•
•
Naonal Security Strategy and Strategic Defence and Security Review 2015
The Silent Threat
The Economic Impact of Fraud Against the Public Sector
annum.
National Security Strategy and Strategic Defence and Security Review 2015
accounted for.
Wood, Keange, Ditcham and Janjeva
Recommendation 4
economic security and prosperity.
The Impact of Fraud on the UK as a Place to Do Business
British Journal of
Criminology
>,
The Independent
The Silent Threat
the predominant focus of efforts remains on prevention of financial sector fraud, rather than
pursuit
Table 1:
Year Unauthorised Fraud
(£ millions)
Authorised Push
Payment Fraud
(£ millions)
Total
(£ millions)
Source: UK Finance, ‘Fraud – The Facts’ reports (2018, 2019, 2020).
Daylight Robbery
Ibid.
Wood, Keange, Ditcham and Janjeva
Recommendation 5
II. The Fraud–Organised Crime
Nexus
S
It is said to affect more UK citizens, more often, than any
national reputation and infrastructure.
Serious and Organised Crime Strategy
The Silent Threat
has resulted in a limited
primary
Fraud: Time to Choose
BBC News
Wood, Keange, Ditcham and Janjeva
While the real
The Oxford Handbook of Organized Crime
Public Money and
Management
Organised Crime Groups Involved in Fraud
Ibid.
Organised Crime Groups Involved in Fraud
The Silent Threat
Recommendation 6
• Professionally organised frauds
• Professionally enabled frauds
to facilitate the fraud.
Professionally Organised Fraud
Trends and Issues in Criminal Justice
Ibid.
Wood, Keange, Ditcham and Janjeva
could
types of fraud at an industrial scale and speed.
Case Study: Coronavirus Frauds
opportunities on a transnational scale.
Serious and Organised Crime Strategy
BBC News
Financial Times
RUSI Commentary
BBC News
The Silent Threat
111
fraudulent purposes.
Professionally Enabled Fraud
112
Bloomberg,
Ibid.
Financial Times,
Wood, Keange, Ditcham and Janjeva
113 These
Case Study: Pension Liberaon Frauds
multimillion-pound-pension-scams
Ibid.
The Silent Threat
121
122 the true scale of
123
Ibid.
>, accessed
FT Adviser,
Wood, Keange, Ditcham and Janjeva
minds of offenders.
Breaking Down Operaonal Silos
131
Recommendation 7
Breaking Down Informaonal Silos
132 more could
133
Serious and Organised Crime Strategy.
Ibid.
national-economic-crime-centre
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sectors,
Recommendation 8
III. Fraud and Terrorist Financing
A
Indeed, as
HM Treasury, Budget 2020
RUSI Occasional Papers
RUSI Occasional Papers
Raconteur
Global Crime
>,
The Silent Threat
Inspire
the author
real-life cases explored in the rest of this chapter.
counterterrorism armoury.
Inspire
Ibid.
Ibid.
Ibid.
Associated Press,
Wood, Keange, Ditcham and Janjeva
This
Case Study: Courier Fraud
In this case,
The Guardian,
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attempted frauds.
Case Study: Online Sales-Based Fraud
Identy The
BBC News,
BBC News,
Tamebay
Manchester Evening News
Wood, Keange, Ditcham and Janjeva
Recommendation 9
Fraudulent Claims for Social Security Support
documents-and-the-implications-for-homeland-security
Ibid.
>,
The Silent Threat
Case Study: Benet Fraud
are a function of system failures.
Case Study: Student Loan Fraud
Wall Street Journal
The Guardian
BBC News
Wood, Keange, Ditcham and Janjeva
noted to The Daily Telegraph
Recommendation 10
Tax and Revenue Fraud
help to minimise this risk.
Case Study: Tax Credits and Rebates
refund from the IRS.
Daily Telegraph
and-false-claim-conspiracy
The Silent Threat
The Sunday Times
Case Study: Gi Aid
so for the
under
Case Study: Excise Fraud
crime-type operations
Sunday Times
>, accessed
Daily Telegraph,
Civil Society News,
BBC News
Wood, Keange, Ditcham and Janjeva
Case Study: Coronavirus-Related Fraud
Recommendation 11
BBC News
BBC News,
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Case Study: Credit Card Fraud
are often not identified until the fraudster has had the opportunity to make use of their
Case Study: Fraudulently Obtained Banking Loans
Yorkshire Live,
>,
The Times
Wood, Keange, Ditcham and Janjeva
counterterrorism response.
>, accessed
Ibid.
Ibid.
The Silent Threat
Attina
The Times,
Wood, Keange, Ditcham and Janjeva
Table 2:
2013/14 2014/15 2015/16
Prosecuons
Total Alternave Prosecuons 16 24 55
Total Terrorist Financing
Prosecuons (England, Scotland
and Wales)
N/A 47 89
Convicons
Total Alternave Convicons 14 11 33
Total Terrorist Financing
Convicons (England, Scotland and
Wales)
N/A 39 47
Source: Financial Acon Task Force, ‘An-Money Laundering and Counter-Terrorist Financing Measures: United
Kingdom – Mutual Evaluaon Report’, December 2018, p. 96.
Note: There is a discrepancy between the reproduced table in this chapter and the table in the MER. This is due
to addion errors in the FATF document.
The Silent Threat
and as the UK national security threat from lone actors and small cells expands to include a
Recommendation 12
Recommendation 13
Ibid.
Conclusions
T
•
better strategic understanding
• There is a need for better leadership
44 The Silent Threat
•
•
incomplete picture of the national security threat. While the paper proposes that a specific
focus on fraud as a national security concern is needed to shift the dial in the response,
interdisciplinary connections
About the Authors
Helena Wood
Tom Keatinge
Keith Ditcham
affects specific outcomes.
Ardi Janjeva
