Financial institutions can expect to face greater scrutiny as watchdogs target fraud in a drive to recover diverted funds
Covid relief fraud
Governments worldwide responded to the Covid-19 pandemic and its economic effects by distributing unprecedented sums to individuals and businesses – often through financial institutions. Hastily launched programs – such as US’s Paycheck Protection Program (PPP), the UK’s CBILS and BBLS schemes, and Singapore’s Covid-19 grants and payouts – often relied on recipients to self-certify their eligibility, with little or no verification. Unsurprisingly, widespread and massive fraud is now being uncovered.
With the pandemic finally behind most countries, regulators and prosecutors are ramping up their efforts to claw back funds and punish the culpable. The US Department of Justice (DOJ) has formed a Covid relief fraud task fraud; DOJ has already charged approximately 500 defendants with criminally extracting over USD 700 million from government programs. One US bank recently settled DOJ’s False Claims Act charges for knowingly processing a PPP loan on behalf of an ineligible customer.
In the UK, only £160 million (of an estimated £1.1 billion) of Bounce Back Loan Scheme (BBLS) fraud had been investigated as of September 2022. The Financial Conduct Authority (FCA) is focused on allegations of fraud involving regulated firms but had no open BBLS-related investigations in March 2022.
In Australia,…
