The UK’s National Crime Agency (NCA) has warned on the risk of emergency taxpayer-backed loans for small business being targeted by criminals as three men working for a London financial institution have been arrested as part of an investigation into fraudulent Bounce Back Loan claims totalling £6 million.
Officers from the agency’s Complex Financial Crime Team apprehended two men – one 30-year-old from Camden and 31-year-old from Mitcham – at their place of work. The third man, also aged 30, was arrested during a search of the address in Camden. Each was released following searches and interviews whilst enquiries continue. The fraudulent claims are believed to have been made through the use of false data and documents. Enquiries are ongoing to establish the true extent of their activity and whether others are involved.
Gary Cathcart, Head of Financial Investigation at the NCA said: “Ensuring the integrity of the financial sector is a vital part of our work to tackle illicit finance. Professional enablers who use their specialist knowledge to facilitate criminal activity represent a significant threat, and the NCA will continue to work closely with our partners to target anyone involved in fraud.”
Some banks including HSBC, Barclays, Natwest and Lloyds have started to freeze accounts over fears that government-backed bounce back loans have been obtained fraudulently according to the national press.
The National Audit Office (NAO) reported last year that the Bounce Back Loan Scheme succeeded in quickly supporting small businesses, but the government faces a potential loss of £15 billion to £26 billion through businesses not being able to repay the loans, and fraud.
The National Audit Office (NAO) said up to 60% of emergency pandemic loans made under the Bounce Back scheme may never be repaid, and taxpayers could lose as much as £26bn, from fraud, organised crime or defaults.
The lending scheme carried lighter checks than others and was aimed at small businesses unable to access other pandemic funding support.
The NAO report warned that the speed with which the scheme was rolled out heightened the fraud risk. It took a month to ensure businesses could not receive more than one loan.
As 24 January, 1.471 million loans to businesses, totalling £44.74 billion according to the HM Treasury.
The Bank’s data shows that the five largest UK lenders (Barclays, HSBC, Lloyds/Bank of Scotland, NatWest/RBS and Santander) provided £90% of the value of the loans distributed.