Two of the most developed and largest economies in the world, the US and the UK have seen their criminality averages increase according to the Global Organised Crime Index, signalling a worrying trend that does not spare countries widely recognized as stable and wealthy.
In the case of both these G7 countries, the upsurge in criminality levels has appeared to be driven by the inclusion of new indicators, some of which are assessed to thrive in strong economies. The most glaring examples of such illicit economies are cyber-dependent crimes and financial crimes.
Many developed economies are more susceptible to financial crimes due to their ‘business-friendly’ regulatory frameworks, openness to foreign capital and investment, and integration into the global financial system. All these factors, which make such countries attractive for legitimate financial activity, also leave them vulnerable to criminal exploitation.
In the UK, for example, despite London being one of the biggest financial hubs in the world and a global epicentre for international payments, investments and banking, which certainly drives economic growth, the pervasiveness of financial crimes is a serious risk. Numerous reports over recent years have highlighted the scale of this crime and its impact on the country and outlined possible responses to curb it.
Nevertheless, in the face of increasing awareness of the phenomenon, institutions and stakeholders have reportedly failed to deal a decisive blow to this growing threat.
Official statistics indicate that fraud constitutes the largest stand-alone crime type in England and Wales, with one in 15 adults falling victim to fraud in 2022 (18% of them being victimized more than once), while 80% of all reported fraud was cyber-enabled.
Digital fraud, in particular, rose substantially in the UK, with account takeovers and payment transfer frauds experiencing a spike in recent years, also as a consequence of the increased reliance on digital tools derived from the COVID-19 pandemic.
However, fraudulent financial activities are also linked to more traditional offences, including tax evasion, embezzlement and misuse of public resources. Similarly, according to the latest available statistics released by the US Federal Trade Commission, US citizens lost almost $8.8 billion to various types of scams in 2022, following a surge of over 30% in fraud-related losses compared to the previous year.
In 2021, an estimated 5% of US citizens fell victim to fraud, collectively losing $5.8 billion – a 70% increase since 2020.
Most US-based fraud takes the form of imposter scams, internet service scams and business opportunity scams. Companies and financial institutions are also frequently targeted in the country, with fraud rates and losses increasing for nearly all payment types from 2021 to 2022.
Financial crimes are a significant threat to the security and prosperity of developed countries, as they endanger the soundness of financial systems and impact all sectors of society, from citizens to the private sector and government. Public anxiety has grown over the failure of states to mount an adequate response and the inability of mandated institutions to address systemic deficiencies, such as weak checks on information, transparency loopholes, and ineffective supervision and enforcement.
Although financial criminals are often well organized and persistent, governments and industry need to work together to take proactive steps to tackle fraud.
This objective was flagged in the 2023 UK Fraud Strategy, which aims to reduce fraud by 10% from 2019 levels by December 2024 through increased cooperation and intelligence sharing and increased law enforcement efforts, including better investigation and prosecution processes and enhanced systems for victims to report such crimes to the police.
