November 29, 2022

Volume XII, Number 333


November 28, 2022

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Cost of Living Crisis: The Implications for Financial Crime


In today’s global, technology-driven economy, financial crime risk takes many forms. Those responsible are highly innovative in devising and deploying methods to perpetrate financial crimes, leveraging knowledge and cutting-edge technologies to exploit weaknesses. Equally, customer expectations and speed of payments is making it harder for banks to detect and prevent fraud and money laundering. 

Fraud rose from £1.2bn in 2020 to £1.3bn last Year [1]. The global pandemic reshaped the fraud landscape with social media and increasing levels of online purchasing creating the perfect environment for fraudsters. Social engineering continues to be a key driver of both unauthorized fraud and authorized fraud (£583m in 2021 up 38%) [1]. 

Britons now face the challenge of soaring energy costs and 40-year high inflation, resulting in significant financial pressures. This leaves the UK public and banking system susceptible to schemes devised by financial criminals specifically to exploit this crisis.


The risks are not limited to financial crime. A bank’s conduct and approach to treating its customers fairly will be in the spotlight. With growing numbers of individuals falling victim to fraud and a 13% annual increase in the numbers of households turning to consumer credit to meet their financial commitments [2], banks will need to consider their approach to supporting customers through this challenging period. 

Furthermore, the pandemic highlighted the innovation of fraudsters, who mobilized quickly to obtain £1.1billion of fraudulent Bounce Back Loans. The ability of fraudsters to rapidly adapt their scams shone a light on the need for banks to be vigilant in detecting new fraud typologies.

While the response to higher inflation and interest rates will be fundamentally different, banks need to apply learnings from the pandemic to protect themselves from criminals actively seeking opportunities to exploit the financial systems. Detecting fraud and use of money mules is challenging despite the monitoring tools adopted by banks. Fraudsters ensure transactions align with usual account behavior thereby circumventing monitoring rules. Additionally, some fraudsters operate a single use approach to mules making it harder for monitoring tools to detect fraudulent activity. Equally, fraudsters using the accounts of unwitting customers is helping mask illicit payments.


Asking credit brokers and firms providing high-cost lending products to ensure the financial promotions are clear, fair, and not misleading

Highlighting the importance of understanding the changing pressures on consumers and treating all borrowers fairly


  1. Increased compensation for bank staff to reduce risk of internal misconduct

  2. Increased adoption of real-time transaction monitoring tools

  3. Adoption of advanced analytics, machine learning to strengthen detective, and preventative controls

  4. Sharing intelligence internally and with industry peers on emerging threats, data breaches, and compromised card details

  5. Continued proactive customer education and awareness campaigns


While the FCA has not yet announced financial crime related guidance on how to react to the current crisis, its expectation is that banks will apply a similar approach to the financial crime control enhancements and other measures implemented during the coronavirus pandemic, factoring in any relevant differences. Specifically, banks must consider the prolonged impact of inflation and rising energy prices on customers’ budgets and the economy in general.

Following the pandemic, some households are already facing increased financial pressure and with rising prices are struggling to meet their financial obligations. This results in vulnerable customers who are susceptible to approaches from fraudsters and organizations or individuals seeking to launder money.

The Dear CEO letter issued by the FCA in May 2021 stating ‘action needed in response to common control failings identified in anti-money laundering frameworks’ provides insight on the relevant areas banks should continue to assess in order to ensure both detective and preventive controls are adequate to address new risk typologies resulting from the cost of living crisis.


  • Business Wide Risk Assessment: Have you considered changes in inherent risk and mitigating controls?

  • Customer Risk Assessment: Does your customer risk assessment factor in risk indicators identified through ongoing monitoring?

  • Customer Due Diligence: Are you completing sufficient enhanced due diligence on higher risk individuals?

  • Transaction Monitoring: Are your existing rules and tolerances sufficient in detecting the emerging risks?


[1] UK Finance – Annual Fraud Report: The definitive overview of payment industry fraud in 2021

[2] Bank of England – Money and credit report July 2022

Copyright © 2022 Ankura Consulting Group, LLC. All rights reserved.National Law Review, Volume XII, Number 278

About this Author

Lee Hale Senior Managing Director Ankura
Senior Managing Director

Lee Hale is a Senior Managing Director at Ankura based in London. He specializes in all aspects of financial crime and is a proven executive leader with over 20 years of anti-financial crime experience covering retail, wealth, corporate, and investment banking.

Most notably, Lee has performed critical leadership roles in investigating and remediating some of the most high-profile regulatory enforcement actions within financial services. These include a Deferred Prosecution Agreement (DPA), Cease and Desist Orders, Federal Financial Supervisory...

Andrew Pimlott Senior Managing Director Ankura
Senior Managing Director

Andrew Pimlott is a Senior Managing Director at Ankura. He is a financial services expert having previously led financial crime investigations across the U.S., Europe, and the Middle East. He has led his clients, who are among the largest financial institutions, through exceptionally complex and impactful regulatory and legal matters, and has on numerous occasions represented them before the U.S. New York DFS, Treasury/OFAC, DOJ and FBI as well as EMEA regulators.

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Rick Somerset-Williams Ankura Managing Director
Managing Director

Rick Somerset-Williams is a Managing Director at Ankura based in London. He has over 20 years of financial services experience gained at top tier global banks and organizations within the fintech industry.

Rick has developed significant industry expertise enabling him to support clients on all aspects of financial crime. He has held several senior leadership roles with a demonstrable track record of delivery within complex financial institutions. This includes a senior role at a Big 4 consultancy where he provided clients with insight on best...