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What is Fraud Investigation?

Compliance Knowledge Base | Fraud Awareness

Posted by: Morgan Rennie Published: Tue, 11 Sep 2018 Last Reviewed: Tue, 11 Sep 2018
What is Fraud Investigation?

A fraud investigation is conducted with the intention to protect and offer justice to the victim of a fraudulent offence, and in turn to punish the fraudster responsible for the offence. Fraudulent crime has been rising, and now as an attempt to deter individuals from practicing fraud, the fraud investigation process has intensified in conjunction with the repercussions. If a fraudster has committed a fraudulent offence which is of high risk, they will face potential prosecution at crown court. It is important to be aware of the fraud investigation process and the potential repercussions of fraud, which have the potential to damage an individual and a business both financially and morally.

What is the fraud investigation process?

Initially, in the UK the report of a fraudulent act will be registered with Action Fraud, the national fraud reporting centre. UK citizens are encouraged by the government to contact Action Fraud if they have a suspicion that fraudulent activity has taken place or if they believe that they might have been a victim of fraud. Following this, Action Fraud will decide which fraud reports are of significance and hold the most weight, and set into motion the fraud investigation process, which is carried out by other bodies.

What is Fraud Investigation?

The Department for Work and Pensions, HM Revenue and Customs and the relevant local authorities close to the fraud case are amongst the bodies which are involved in instigating a fraud investigation.

It needs to be decided what type of fraud has occurred because this will tailor the investigation process. Fraud can be hard to determine due to the many different forms which it can take. The most notable forms of fraud are:

Corporate Fraud

Identity Fraud

Benefit Fraud

VAT Fraud

Cyber Fraud

Following the determined type of fraud, all evidence possible will be gathered to bulk out the investigation case. Evidence can be collected through a variety of means, including background checks, surveillance checks, employee investigations and investigations of an entire business. Subsequently, the victims and potential fraudsters will be interviewed. At this stage, if a fraudster admits to the fraudulent offence, they might be issued with a warning, but this is only if the fraud offence is of low-risk.

The relevant council involved, and the Department for Work and Pensions would issue this cautionary warning. This warning would be placed on the UK National Database, but it would not be placed on a criminal record.

If a fraudster does not plead guilty at the interview stage, or their offence is too high risk to simply issue a cautionary warning or a fine, then the investigation will progress to the stage of a court hearing. The magistrates court will be used for these prosecution hearings, but if the fraudulent offence is more severe, then the crown court will be used.

In August 2018 Barnet Council conducted a fraud investigation which resulted in the sending of thirty people to a magistrate court. This was following the incriminating evidence which exposed these individuals to be using disabled parking badges, which were not their own, to allow them to park in disabled parking spots for three months. These individuals had already received warnings. Following this, they were sentenced to a court hearing.

Currently there is an expansive effort to try and crack down on fraud to deter individuals from engaging in it. The fraud investigation process and the subsequent punishments have intensified to highlight that fraud is not tolerated. Consequently, fraud awareness training and prevention is essential.

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