Critic: U.K. fraud strategy "more worthy of Uzbekistan"

Published 19 March 2009

Business fraud costs Britain £14 billion a year; the U.K. government today launched its National Fraud Strategy, but a Cambridge professor harshly criticizes the initiative

The U.K.’s first National Fraud Strategy launched was launched today, aiming to crack down on fraud that costs Britain £14 billion a year, by “strengthening the counter-fraud community’s response to their activities and providing real help, protection and support to individual consumers and businesses”. The three-year strategy has four key aims:


  • Improving the building and sharing of knowledge about fraud through establishing a new National Fraud Reporting Center and National Fraud Intelligence Bureau, under the City of London Police
  • Tackling the most serious fraud threats, such as identify theft
  • Disrupting and punishing more fraudsters while improving support to their victims
  • Improving the nation’s long-term capability to prevent fraud

John Leyden writes that some are not impressed. Ross Anderson, professor in security engineering at the University of Cambridge, said that the proposal to allow the new National Fraud Reporting Center to sit alongside the banking industry funded Dedicated Check and Plastic Crime Unit within the City of London police is an arrangement “more worthy of Uzbekistan than of Britain.” Anderson, one of the world’s foremost experts on banking security, writes:

You have to ask how eager the City force will be to investigate offenses that bankers don’t want investigated, such as the growing number of insider frauds and chip card cloning? And how vigorously will City cops investigate their paymasters for the fraud of claiming that their systems are secure, when they’re not, in order to avoid paying compensation to defrauded account holders?

The purpose of the old system was to keep the fraud figures artificially low while enabling the banks to control such investigations as did take place. And what precisely has changed?


The lessons of the credit crunch just don’t seem to have sunk in yet. The Government just can’t kick the habit of kowtowing to bankers.

The Cambridge professor adds that the creation of the new National Fraud Reporting Center, to be run by the City of London Police, is “presumably intended to defuse the Lords’ criticisms of the current system whereby fraud must be reported to the banks, not to the police”. Cambridge security researchers, led by Anderson, have consistently argued that the business model for banks consistently transfers liability for fraud on customers, through unfair terms and conditions and “false claims about system security.”


This is a regulatory failure: the FSA has been just as gullible in accepting the banking industry’s security models as they were about accepting its credit-risk models,” Anderson writes.


Anderson is well known in the United Kingdom for testifying in cases about “phantom withdrawals” from bank accounts, arguing against the frequent insistence of banks that its systems are foolproof and that any contested withdrawals must therefore be the fault of customers.