I have always liked the various regional fraud forums (or should it be fora?). They provide a great networking event for me as a forensic accountant specialising in fraud to attend. Since meeting with Northumbria Police ‘s Phil Butler prior to the inaugural North East Fraud Forum event – must be as far back as 2003 – I have been attending these events – including the North West Fraud Forum and the London Fraud Forum. I spoke at the very first one and have given talks at them subsequently. There are other fora around the country, but you can only attend so many networking events!

In my own area, Yorkshire and Humber, I had been attempting to get a local fraud forum galvanised for some time. I remember working with a leading fraud lawyer from DLA Piper to interest some of our public sector colleagues to spark off a similar regional forum. This was back in 2004/2005. My lawyer friend was tasked with getting the Leeds City Council interested and I was to do the same with the local West Yorkshire Police force. Unfortunately neither of us had much success – perhaps we were not very good at lobbying or working the “politics” of the matter. My own response from the then acting DI of the WY Fraud Office was negative – and that I should seek to attend the North East Fraud Forum for any networking I wanted to do!

Thankfully that officer has moved on now and there is indeed a Yorkshire and Humberside regional Fraud Forum in operation – set up by the sterling efforts of others I must say, though I continue to be a strong supporter. It does get a lot of support from the police forces, not just West Yorkshire but North Yorkshire, Humberside and South Yorkshire forces as well as various other leading organisations and bodies.

In fact Paul Welton of Humberside Police Economic Crime Unit called me last week and asked if I would like to speak to BBC Humberside about why I attended the forum and I said that I would be delighted to help. I was to chat to Andy Comfort on his breakfast programme on Monday morning of the 7th of June – the same day as one of the forums events “Tackling Business Fraud” (that I was attending later that day).

So this morning – eight o’clock approaches and I am sitting nervously waiting for my phone call – a list of prepared responses as to why I attended Yorkshire and Humberside Fraud Forum’s events.  Of course once the call comes all preparation goes out of the window – we chat about fraud live on radio for well over 10 minutes and how it is an increasing problem today. It certainly focuses the mind – what are the problems that fraud poses for us today and how do we tackle it? The fraud forums are only a small part of the answer, but they do go a little way to illustrate the importance of the public and private sectors working together – something that all seem to voice but few ever look practically to see how it can work.

The police will tell you that they are under-resourced when it comes to dealing with cases of fraud – it is not surprising as fraud investigations are extremely labour intensive. I understand that there are only something like 400 – 500 full time police officers working in the various fraud squads around the uk. Compare that to a typical fraud, maybe worth around £250,000 in losses to the victim – might take up the full time of at least one if not more police officers – for 6 months, a year or even longer. Then consider that the level of fraud is estimated to cost the UK some £30.2 billion per year (as estimated by the National Fraud Authority and probably a vast underestimate) and you will see why the police alone can only chip at the surface of the fraud problem.

Other agencies investigate fraud of course – we have the Serious Fraud Office – that the new government is considering combining with the Financial Services Authority and Office of Fair Trading’s fraud investigation wings – to form a more powerful Economic Crime Agency.  We have  investigators from the Department For Business Innovation and Skills and from HMRC as well as from other agencies – all investigating fraud.

But what we really do need – and this is exactly in tune with David Cameron’s fight against public sector waste of recent years – is a much closer involvement of the private sector in the fight against fraud generally. I would like to see this achieved by the utilisation of private sector investigation resources and financial fraud specialists – using transparent tendering methods based on obtaining the best quality of services at the most reasonable prices.

I remember back in 2003 when the Proceeds of Crime 2002 legislation and associated Money Laundering Regulations 2003 (both subsequently amended by Serious Organised Crime and Police Act 2005 and Money Laundering Regulations 2007) were coming into force. As an accountant working in the regulated sector and specialising in fraud/asset tracing/money laundering I naturally took an interest in these new developments.

For the first time professionals, namely accountants and lawyers, were placed firmly in the firing line when it came to dealing with crime. It was argued that criminals needed professionals to not only give their exploits a veneer of respectability but also to help them get rid of their criminal earnings – to help launder the money. In fact history has shown that most big time money launderers for organised crime have been lawyers and accountants.

So now we were expected to be the government’s unpaid guardians preventing illegal money transfers – in a way banks and other finacial institutions had already been recruited. I gave lectures around the firm about the penalties for getting it wrong, for tipping clients off or even being in a position of being accused of actually laundering the spoils. One talk was at Northumbria Police’s inaugrual North East Fraud Forum conference held in St James Park,  Newcastle in March 2003. That drew around 300 delegates from all over the country – the general feeling was of uncertainty as to how the developments would affect professionals. I was also one of the few civilians to attend the Association Of Chief Police Officers biennial Fraud Forum later on that year in the Autumn – with a very similar theme of money laundering. Again I remember that the talks discussing professional involvement were a little unclear.

By now we all know that a number of professionals have found themselves in deep water (or prison to be precise) for turning a blind eye to their clients activities – even if they were not involved directly. We have to undertake rigorous checks on our clients – check their passports, utility bills, addresses, company details etc. To “Know Your Client” and to report any “suspicious activities” means that we should be able to prevent the criminals from dealing in financial transactions.

But fraud is as prevalent as ever. The frauds seem to be getting bigger (Maddoff!) and the estimates of its effect on the economy are growing (£100 billion per annum in the UK – 5% of all USA businesses turnover lost to fraud). I do not think that the new legislation and regulations have made any difference to the seriod fraudster and their supporting cast of professionals. They have given the rest of us professionals another layer of regulatory administration to struggle with!

As a forensic accountant specialising in fraud investigation I do two types of work. The first is publicly funded – I am paid by the Police, the Department for Business Innovation and Skills, the Legal Services Commission etc. Publicly funded work is not considered to be regulated and therefore I do not check out my client (KYC) and I am not concerned about reporting and fraud or crime I come across – because it would be pointless reporting to SOCA when I am already working for the Police (for example).

The other type of work is privately funded – i.e. I am investigating (usually fraud) for a private client. Whichever way you look at it, fraud is a crime and therefore not only have I carried out checks on my client (the victim of the fraud) but in all likelyhood I will have to put in a SAR to the Serious and Organised Crime Agency. In practice I will do this and also report to the appropriate police force regional fraud liaison officer to ensure that my client’s business is not surprised by a dawn raid!

It seems that we still have a way to go, probably by way of simplification of the current Act and Guidelines and a more joined up approach between the public and the private sector, before we professionals can be properly effective in assisting the authorities in their fight against fraud and organised crime.