March 12, 2021
Fraud Friday – Three London Bankers Arrested for £6 Million Bounce Back Loan Fraud Scheme
“Ensuring the integrity of the financial sector is a vital part of our work to tackle illicit finance,” says the Head of Financial Investigation at the UK National Crime Agency (NCA). “Criminal exploitation of the Bounce Back Loan scheme remains a priority for the NCA, be that by individuals looking to secure illicit loans for themselves or professional enablers who use their specialist knowledge to facilitate fraudulent applications for others. The NCA is working closely with our partners in NATIS and wider law enforcement to target those involved in this fraud.”
On January 23, 2021, British authorities arrested three financial institution employees for allegedly misusing their position as authorized federal lenders to fraudulently gain access to over £6 million ($8.2 million) in funding intended to support struggling small businesses during the pandemic.
The NCA says all three men worked for the same London financial institution and are suspected of using their “specialist knowledge” to produce realistic false data and documents in support of numerous Bounce Bank Loans. All three suspects have been released while inquiries into the extent of the fraud and the possibility of others being involved continue.
The UK’s bounce-back loan scheme was introduced last May as a way to give small and medium-sized businesses access to low-interest financing during the pandemic. Under the program, eligible firms can borrow up to 25% of their turnover or £50,000, whichever is smaller. Like the American Paycheck Protection Program, the government guarantees 100% of the loan and there are no fees or interest for the first few months. However, the UK’s Bounce Back Loans are not forgivable and have a slightly higher interest rate of 2.5%.
Although the UK’s National Audit Office has reported that their Bounce Back Loan Scheme has been successful in quickly supporting small businesses throughout the country, their initial estimates suggest that the program could produce a potential loss of anywhere between £15 billion and £26 billion through acts of fraud.