HMRC has invested nearly £300m to bolster its defences against rising fraud levels.
This money will directly affect the UK tax office’s compliance and fraud investigation efforts, allowing for an increase in staffing levels and pay in the Customer Compliance Group (CCG) and Fraud Investigation Service (FIS).
The CCG is responsible for the department’s enforcement and compliance activities, such as managing taxpayer error connections and cases involving tax evasion and fraud. Within the CCG, the FIS leads both civil and criminal investigations into the most serious cases of fraud and financial misconduct.
Yves Laffont, Sector Lead of Financial Crime Consulting Services at FDM Group, commented: “HMRC’s investment in strengthening its fraud and compliance teams serves as a strong example for businesses looking to build out their own teams.
“At a time when fraudulent activity is becoming increasingly sophisticated, where we’re seeing AI used in vendor impersonation scams for example, bolstering these functions to prevent breaches and losses is essential.
“65% of finance professionals were victims of attempted or actual fraud last year, highlighting that anyone can be targeted and therefore needs to be protected.”
In 2021, the CCG had 25,656 full-time equivalent staff, hitting a peak of 28,617 in 2022 and settling at 26,841 in 2023. However, this number is expected to be at 27,340 at the moment, according to analysis by the Parliament Street think tank which accessed this data under the Freedom of Information Act.
In terms of the FIS, the data shows that staffing levels mirrored that of the CCG, increasing from 4,244 FTE in 2021 to 4,956 by 2022, with a slight decrease to 4,735 by October 2023.
Laffont added: “Equipping teams with the requisite skills, such as data risk management, enables staff to identify risks faster, close compliance gaps, and prevent losses. Organisations should prioritise experiential learning through simulations of real-world scenarios, teaching staff not only how to identify risks and handle important tasks, but also to understand the human impact of financial crime.
“This will facilitate continuous learning while building empathy and social responsibility, helping staff stay ahead of both fraud threats and their evolving societal implications.”
This development aligns with the government’s mission of combatting fraud, which has led to more regulations being introduced such as the recent reimbursement rule by the Payments Systems Regulator (PSR).
Despite a lot of institutions opposing some aspects of these new regulations, many stakeholders believe that this isn’t enough, with Woody Malouf, Head of Financial Crime at Revolut saying that ‘giant leaps’ are needed not ‘baby steps’.
“In England, fraud represents over 40% of recorded crimes, yet commands merely 2% of police resources, a disparity that disproportionately affects vulnerable populations, including elderly citizens, low-income communities, and small businesses, Laffont continued.
“The landscape is shifting dramatically in 2024, with enforcement actions becoming a daily reality for all businesses. The recent cases of Starling and Metro Bank signal a concerning trend: tier two firms, often perceived to have less robust controls, are emerging as prime targets for sophisticated criminal enterprises. This poses a particular threat to their customers, who often choose these institutions for their accessibility and community focus.”
Sharing his thoughts on what will have the greatest impact against these rising levels, Laffon believes that the “battlefield is not just about technological/AI solutions and requires rapid skill acquisition, holistic team development, constant agility and strategic succession planning.”
He concluded: “However, the foundation lies in having the right infrastructure that cultivates a risk management mindset, adaptability to change and an ability to establish a trusted partnership with the business. At FDM, through relentless dedication, we’ve established Skills Lab – not just a concept, but a proven, viable solution that stands unique in the market.”
