Warning over 'mafia' gangs infiltrating British banks

Britain, UK news from The Times and The Sunday Times - Times Online: "GANGS of organised criminals have infiltrated Britain’s leading banks to commit fraud, the City’s most senior financial regulator cautioned yesterday.

Callum McCarthy, the chairman of the Financial Services Authority, said that criminals were getting jobs in the financial services industry to gain knowledge and sidestep anti-fraud systems.

Senior police last night confirmed the problem, which they said involved gangs bribing staff to pass over confidential information. They said that the threat had got worse in the past few months.

Mr McCarthy said: “There is increasing evidence that organised criminal groups are placing their own people in financial services firms so that they can increase their knowledge of firms’ systems and controls and thus learn to circumvent them to commit their frauds.”

The comments, in a speech to a financial crime conference, came as it emerged yesterday that seven former employees of Barclays Bank were being pursued for allegedly colluding to defraud customers and the bank.

In March, two fraudsters were jailed after using a bank insider to steal nearly £200,000 from the comic actor Ricky Gervais. The insider was never caught. The attempts by mafia-type gangs to plant their own people as bona fide employees in banks represent an escalation of the war between fraudsters and the financial industry.

Fraud costs the UK around £14 billion, or £230 per person, and it is estimated that £25 billion of drug-related and other “dirty money” is laundered through British financial insti-tutions every year.

One banker said yesterday that though banks did their best to vet employees thoroughly, human rights legislation made it harder for checks to be run on prospective recruits.

The FSA’s concerns about organised crime sit uneasily with its plans to push through rules cutting red tape that mean it will no longer check tens of thousands of City workers in the wholesale financial services industry for criminal records.

The body that runs the clearing systems at the heart of the financial system has launched an initiative to prevent criminal employees sacked by one bank from being hired by another. It also sponsors the Dedicated Cheque and Plastic Crime Unit, which is made up of offi-cers from the Metropolitan and City of London police forces.

Mr McCarthy said that the FSA’s work on bank staff fraud had highlighted concerns about data protection rules making data sharing unnecessarily difficult “and we will be seeking a resolution to the problem”.

Police say that the attempts to infiltrate the banking system have been prompted by the way that the public have become more security-conscious over ID theft in the past couple of years. Far less information is now given on credit card receipts and several campaigns have been mounted to get people to make use of shredders.

City of London detectives say they have been dealing with the problem of infiltration for some time but it has got worse in the past 18 months to two years. In many cases, gangs have targeted staff and made approaches during lunch breaks or in bars or pubs after work to see if they can be suborned. In some companies staff have stopped wearing uniform on the way to work in case they are approached.

Detective Chief Inspector Oliver Shaw said yesterday that the attempts had “become quite blatant. People in large branches will be approached. There will be covert approaches when they come out to lunch or at social venues.”

He said that the majority of staff ignored the approaches but there were a “small percentage” who would bite and once they were working for the criminals it was very difficult to get out.

The targets were often the banking and call centres around London and the South East. The approach could be nothing more than a telephone number and the suggestion that the gang member might be able to help with a financial problem.

COST OF CRIME

£14 billion a year: the cost of fraud to the economy

278,902 fraud offences were committed in 2004-5

£505 million the total value of credit card fraud in 2004

£46 million total cheque fraud in 2004"