SFO calls for UK-wide fraud register

The Serious Fraud Office says the UK urgently needs a new centralised fraud database to combat rising financial crimes as the current FSA-run register is “clearly not working”.

Kathleen Harris, SFO head of policy and standards, says the “mere thought” of a central fraud database containing the personal details of anyone ever convicted of a scam would be a “huge deterrent” because of the reputational damage it would cause.

The FSA Register currently lists supervisory, disciplinary and civil action it has taken against regulated firms and individuals, including civil  penalties imposed under money laundering regulations, under ‘disciplinary history’.

But it clearly states it does not include criminal action, and it “does not hold information on action taken by other enforcement agencies”.

Harris says the UK needs a “fit and proper” response to financial crimes which cost the country around £30bn in 2008, according to the National Fraud Authority (NFA).

This would be much wider than the FSA’s current register, which only captures regulated individuals, and would be held by the SFO or the Home Office. Potential investors could check the register before parting with their money, she says.

Fraudsters could only apply to be removed from the list once they have met certain restorative conditions.

Harris is also calling for the SFO to be given the same power to sanction fraudsters as the FSA, to ensure victims are reunited with their money more quickly.

Currently, the SFO only has the power to prosecute offenders, but lengthy court cases often mean fraud victims never get back their stolen funds, she says.

After a fraud has occurred, she believes sanctions would be “a more effective way of getting money back to victims closer to the criminality occurring”.

“The likelihood is any money will be dissipated by the time it gets to the end of the prosecution,” says Harris.

Public access to personal details, even of convicted fraudsters, would likely face considerable opposition from human rights lawyers. However, former barrister Harris says opposition must be balanced with the rights of the community: “Our job is to protect the community and the financial infrastructure of the community.”

Harris, who has spent over 15 years tackling fraud across several Government departments, says she is “tired of hearing about ill-gotten gains”.

“Why not talk about stopping people getting these gains in the first place?”

“People have made millions fraudulently out of these scams. Why shouldn’t that be logged?”

Cases of systematic fraud, like Madoff in the US and the Kevin Foster case in the UK, would still go through the courts, says Harris.

An FSA spokesperson says it is committed to working with other organisations but it is the NFA’s role to focus on fraud, not the FSA’s.

In a statement, NFA chief executive Dr Bernard Herdan says it is “fully supportive” of current systems which enable the financial industry to check for fraudulent activity, but “would advocate this system being extended to the wider industry and public sector”.

Baigrie Davies director and FSA board member Amanda Davidson backs sanction powers for the SFO and says a fraud register “has merit” as long as the integrity of those running it is “paramount”.

“The FSA register only catches registered individuals, so a central register could act as part of a wider deterrent.”

Fraud cases have hit the headlines repeatedly in 2010. This month, a former director of an investment firm was jailed for three and a half years for his part in a global fraud conspiracy attracting over £250m from 3,000 investors.

In July, two members of a 21-strong tax gang were ordered to re-pay £92.3m, in the biggest ever confiscation order secured by HMRC. In the same month, fraudsters who signed company documents “Gordon Gekko” were jailed over a £7m share scam.