ICAEW.com works better with JavaScript enabled.

Will Brexit result in more fraud?

22 January 2020: once the UK finally leaves the EU, businesses of all kinds will experience economic costs and opportunities. Will one of the costs be an increased risk of fraud? We asked two experts for their views.

Sannan Khan is a counter fraud specialist and a director in the Forensic Services Team at BDO. 

“Brexit is likely to cause disruption. The uncertainty around it has made it difficult to plan for these changes, so many businesses will only be able to react to them at short notice. That’s where they may be vulnerable. When you have this level of disruption, business managers don’t have the headspace to think about preventing fraud. Some criminals may find they have an opportunity to exploit that.

“For example, if a business stops working with a supplier in the EU and has to look for a new supplier in the UK at short notice, it may enter into a new relationship without undertaking due diligence.

“If you have a legal and regulatory environment that is changing, fraudsters are likely to take advantage of that. For example, they may use malware that tells a recipient of an email that there is another step they need to take to achieve compliance. Physical borders won’t stop cyber fraud.

“In time you would expect the counter fraud community to catch up. But before that there will be disruption and that will be exploited by fraudsters.”

David Clarke is Chair of the Fraud Advisory Council and a former senior police officer, responsible for designing and leading the National Fraud Intelligence Bureau.

“There is a risk that fraudsters will exploit uncertainty, so companies need to have controls and due diligence in place. Cyber criminals don’t care about borders, but the UK has put a lot of resources into improving cyber defences.

“We’ve always been outside some EU arrangements for cross-border law enforcement but, after Brexit, UK law enforcement agencies should still have access to the Schengen Information System, which shares information between border control agencies, customs and police forces. If you look at who is allowed to access that system, Norway’s on there, Croatia’s on there. You don’t have to be in the EU.

“We also work with police forces elsewhere. Recently, City of London Police and police in India worked together to tackle fraudulent activity happening in Indian call centres. UK police also work closely with law enforcement agencies in the US to fight fraud. In those examples it doesn’t matter whether we’re in the EU or not.”