UK fraud review recommends whistleblower payouts and crypto training for judges

Jonathan Fisher KC published a UK government-commissioned review on July 14. The review encourages paying whistleblowers to combat economic crime and training judges on crypto laundering and AI-enabled fraud cases.

The report is titled “Fraud in the Digital Age,” and is the second and final part of the Independent Review of Disclosure and Fraud Offences. The report was presented to the Parliament by the Home Office on July 14 as a Command Paper, CP 1600. All this was recorded in a written ministerial statement by Lord Hanson of Flint.

In the UK, fraud makes up almost 50% of reported crimes, with a mere 1% resulting in a criminal justice outcome. 

Fisher argued the UK needs to do more to tackle fraud, believing fraud should be regarded “as a national security and economic priority rather than a low-level financial crime.” All these were released in a statement by Red Lion Chambers, Fisher’s law chambers.

UK should pay whistleblowers to speak

The headline of the report recommends that the Serious Fraud Office offer monetary rewards to whistleblowers, with the government enjoined to make consultations on how such a scheme would work. 

The review also recommends certain criminal guardrails in the whistleblower scheme: 

• An offense for knowingly filing false reports to law enforcement
• For harassment or intimidation of whistleblowers. 

Fisher suggested the creation of an independent arbitration panel to handle any whistleblower complaints.

The UK has, for years, resisted the urge to follow the American model of employing paid informants and offering whistleblowers a cut of recovered funds. That seems to be changing. Last November, HM Revenue & Customs launched a US-style reward program to help close a tax gap of £46.8 billion, or ~ $62.8 billion.

The courtroom crypto gap

When it comes to crypto, the problem lies at the bench, with non-specialist judges and magistrates deemed ill-equipped to handle crypto-related cases reaching them. 

The reviews direct the UK government to get the Judicial College, which trains the judiciary in England and Wales, to prepare a training program for “all judges, including magistrates” so they can deal with the rise in AI-enabled fraud.

The report found the legal framework on fraud to be robust. According to Fisher, the Fraud Act 2006 is “broadly sound” and “well placed to address AI-enabled fraud.” The challenge is the capability of the court system. 

Regional Crown Courts lack the experience to deal with complex fraud cases, as most of the complex fraud cases occur in major cities.

The stakes could not be higher. Over 50% of investment scams are now crypto-related, with the recent case of Qian Zhimin a notable reference. The case produced the UK’s largest-ever crypto seizure of more than 61,000 bitcoin or about $7 billion. 

The review pointed to “pig butchering” schemes and long cons where victims are groomed for weeks, using AI-generated personas, before being lured into fake investment platforms.

The rest of the package

There are 47 recommendations in total. Fisher made other notable proposals, including an anti-fraud levy that would prompt social media companies to do more to combat fraud. 

He also proposed doubling the maximum sentence for serious fraud and money laundering to 20 years, and new offenses that target impersonation and money muling.

The recommendations cut across several departments, and the government said it will study them and issue a prompt response.