Stimulus Fraud & COVID-19
Will the Taxpayer Stomach the Inevitable Scandal That’s Coming?
There is an inevitability to it - and the taxpayer knows it’s coming. The question is: when does the blame game start, and who will lob the first stone? Will it result from a whistle-blower, an exposé by an investigative journalist, the interrogation of officials in a Select Committee or a Freedom of Information application (or something else)?
Injecting masses of money into the economy very quickly was not business-as-usual (BAU) for banks and those lenders registered to provide CBIL and BBL (or bounce-back) loans. There was an overriding imperative, an ethical obligation to move fast. And they did.
The FCA has communicated that they have relaxed various rules that normally apply, for example, in relation to assessing an applicant’s creditworthiness prior to executing a loan. In their statement on 4th May1, in the context of managing financial crime risk, the FCA stated: “We recognise that, currently, the need to manage these risks should be balanced against the need for the fast and efficient release of funds to businesses under the Government’s Schemes.”
But banks are not off the hook, despite government underwriting 80% of the loans (to cover the inevitable and expected high default levels). The Money Laundering Regulations still apply, something the FCA emphasised in their ‘Dear CEO’ letter2 in March. The regulator has also made clear that if a firm has information, “including any relevant flags or alerts – suggesting a customer poses a higher risk, for example, of fraud, money laundering or terrorist financing, it should carry out additional checks.”
July 6, 2020
Forensic & Litigation Consulting
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