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Fraudsters cashing in on Government COVID financial aid

According to the Chairman of the Fraud Advisory Panel, fraudsters have been doing their best to exploit the Government’s COVID financial aid packages.

David Clarke estimates that billions of pounds have been paid to people who were not entitled to it, making this potentially the biggest fraud in British history.

It is hardly surprising that fraudsters see the financial aid packages as rich pickings, with the Government’s fiscal support amounting to more than £407 billion – making the COVID-19 stimulus packages one of the biggest rounds of financial aid the UK has ever delivered.

The Bounce Back Loan Scheme (BBLS), which allows small businesses to borrow up to £50,000 at a flat interest rate of only 2.5 per cent, accounts for £45 billion of the total and it is estimated that up to a third of that amount – around £2.3 billion – has been subject to fraud.

Fraudsters have taken advantage of the speed at which these schemes were set up and the fact that BBLS are relatively easy to obtain.

Generally speaking, applicants have been looked upon favourably, and their application was processed quickly, resulting in limited security checks being undertaken.

Lenders, who would normally undertake extensive due diligence on a borrower, have felt reassurance from the Government’s guarantees, which protect them if a borrower should default.

However, despite the eye-watering loss to taxpayers, the police have been told only to investigate COVID loan fraud where there is evidence of links to organised crime.

This means that recovering the cash, which the Fraud Advisory Panel favours over prosecution, will hinge on forensic investigations to find out where the money went and whether there is any way of getting it back.

Helen Gregory, Forensic Director at Milsted Langdon, said: “There is no doubt that fraudsters have utilised the Government support to get rich of this crisis, but to some degree, the schemes had to strike a balance between the risks of abuse and easy access to finance.

“Now the hard work must begin for forensic accountants and investigators, whose job it will be to attempt to recover this finance.

“Forensic accountants are experienced in following financial processes and building a picture of whether a business owner is acting legitimately or not, so it may take many months to get a true scale of the crimes committed by fraudsters.”

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