Raising awareness of civil asset recovery 'could cut fraud'

Civil fraud and asset recovery expert Jennifer Craven of Pinsent Masons, the law firm behind Out-Law.com, said that if there was greater business awareness of civil recovery methods it might serve as a deterrent to fraudsters.

Craven was commenting after the City of London Police announced a new partnership with Lloyds Bank that will see the two organisations work more closely together to combat fraud and other economic crime. Lloyds has committed £1.5 million to the partnership which will entail a series of initiatives and last three years.

"For example the partnership will deliver cross training of financial investigators with the intention of sharing best practices and expertise across both organisations to enhance capability in the detection, prevention and awareness of economic crime," Lloyds and the City of London Police said in a joint statement.

"In addition, a programme of secondments and exchanges between the City of London Police and Lloyds Banking Group will take place, helping investigators and analysts to better understand criminal methodologies and banking practices and how this affects law enforcement," it said.

Craven welcomed the new collaboration but said it was vital that the profile of civil recovery methods is also raised to highlight how effective they can be when used either in isolation or to complement criminal investigations.

"Fraud is on the increase and is now an epidemic costing the UK £190 billion last year," Craven said. "The news that the City of London Police are teaming with a well-known UK bank to establish a fighting fund will be reassuring news to the wider industry. Greater sharing of information and collaboration between organisations in the public and private sector is essential if prosecution and more importantly higher levels of effective enforcement against fraudsters is to occur."

"However, one important aspect in the fight against fraud which can be overlooked is that of deterrence. Whilst criminal legislation plays a part in this, deterrence might be enhanced if there were greater awareness of the civil recovery methods of holding fraudsters to account. Civil recovery methods can be used either in tandem with criminal prosecution, or separately, where for example there is a lack of evidence or the resource to pursue the fraudster. Either way, it might be possible to bolster an investigation and increase the possibility of bringing wrongdoers to justice where civil recovery is pursued," she said.

"Businesses should be made aware that there are a wide range of powerful interim tools available to support a civil claim in the UK commercial courts including search and seize, disclosure and freezing orders, which can be applicable worldwide. Timing, however, is a critical factor in determining the effectiveness of these tools. The quicker a business acts in seeking legal advice about a fraud, the more likely it is to find itself presented with the options available and the possibility of recovering its losses," Craven said.

Data obtained by Pinsent Masons published in June revealed that there were 7,786 white collar crime prosecutions in England and Wales in 2017, down from 8,304 the year before. The reduction continues a general trend seen since 2011 when the number of white collar prosecutions was 31% higher at 11,261.

A lack of resources for police and prosecutors and the international focus of regulators could be contributing to the falling number of prosecutions, the international law firm said.