Thousands of financial scams adding up to almost £150 million going to fraudsters are reported to consumer watchdog the Financial Conduct Authority (FCA) every year.
More than 4,500 investors are ripped off by pension liberation frauds, share and land banking cons and other dubious investments.
The list includes inheritance fraud; rare earth metals; diamonds; carbon credits and fraud relating to overseas land and property.
The FCA warned many of the scammers are crooks involved in money laundering, financing terrorists and breaking government sanctions against foreign nations.
At the FCA’s financial crime conference, CEO Martin Wheatley warned the regulator is cracking down on fraudsters.
Task force leads crack down
Delegates from the FBI, UK police and financial service providers met at the conference to discuss how to stamp out fraud.
The FCA revealed a new task force aimed at gathering intelligence of financial scams is at work – with pension liberation one of the main targets.
Pension liberation is carried out by fraudsters posing as bogus providers. Retirement savers switch their pension funds to the crooks, who then charge expensive fees for their services and often move the money offshore where it is difficult to track.
The victim is left without a pension and a likely penalty of between 55 and 75% of the transferred fund.
Tracey Dermott, the FCA’s director of enforcement and financial crime, said: “From April 2014, the FCA will monitor thousands of consumer credit firms.
“We expect them to tighten up the way they deal with customers to reduce the incidence of fraud and money laundering. It’s a big job as the risks of fraud are significant.”
Record fines
In the past 12 months, the FCA has imposed a record £321 million in fines on financial providers and advisers in stepping up the fight against fraud. The previous high was £89 million in a year.
Meanwhile, the FCA also published the review results into trade finance involving UK banks.
The team looked at 17 banks offering trade finance and found failures in many of their controls and systems.
The risk of fraud is high as the financing takes place across borders and involves foreign organisations.
The FCA determined many of the banks had no way of assessing whether a trade finance transaction was suspicious, had no clear management controls and that staff were poorly trained in spotting criminal risks.
“Some banks may face regulatory action as part of this review,” said McDermott. “Banks need to take their money laundering andante-crime responsibilities seriously and the FCA will make sure they do.”
