Why the FCA must step up to tackle virus-related crime

It has been a long-accepted belief that the true strength of an organisation can only genuinely be determined when it faces a real test. The social and economic challenges presented by the coronavirus pandemic make it arguably the sternest test that many individuals, businesses and organisations have ever faced.

On 12 March 2020, the Financial Conduct Authority (FCA) published a notice on its website warning investors to avoid coronavirus-related cryptocurrency schemes that may be too good to be true. It went on to alert the reader to illegal schemes that could take many forms, ranging from insurance policies and pension transfers through to high-return investments.

It would be hard to argue against the FCA taking such a step. Yet that appears to be the sum total of its response. While it has issued this stark warning – which perhaps it should be given credit for – the FCA does not appear to have done anything more. A glance at its website at the time of writing shows the FCA emphasising that it is closely monitoring the coronavirus situation and making clear it stands ready to take any steps necessary to ensure that customers are protected and that markets continue to function well. It has piled a lot of information with a coronavirus slant onto its website, which may be of use to those looking for guidance. However, it is worth noting that to date the FCA has not made any announcement in relation to active investigations.

This is surprising when you compare the activities in the United States. A brief look across the Atlantic shows that the US’ Department of Justice (DOJ) has already announced that it has disrupted hundreds of different domains that were being used for illegal activities exploiting the Covid-19 pandemic. One such activity was the seizing of “coronaprevention.org”; with the DOJ and Department for Homeland Security (DHS) alleging its owner tried to sell the domain name for bitcoin to individuals he believed wanted to use it to sell fake Covid-19 testing kits. The individuals were actually undercover officers.

Such action appears in stark contrast to the levels – or lack – of activity we have seen in the UK. Less than a fortnight ago (April 25), Action Fraud UK used Twitter to concede that coronavirus-related scams are on the rise. Activities ranging from online shopping fraud through to fake charity and bank emails designed to obtain personal data are, according to Action Fraud, flourishing in the climate that has been created by lockdown. Action Fraud UK is not shy when it comes to giving advice. Like the FCA, it is happy to administer advice to those who need it. But advice is only part of the required response. Where is the action that needs to be taken against the opportunists looking to make illegal gains out of an international crisis?

We are living through unprecedented times. There may be those who would excuse the lack of activity by the FCA (and possibly other organisations) on the grounds of this being a situation that none of us have ever been in before. But it appears that the US has, at the very least, started taking great strides to take on those exploiting the pandemic. Exactly what results those strides achieve when it comes to prosecutions and / or preventing any further such virus-related financial crime remains to be seen. But at least those strides are being made. In the UK, it is hard to find evidence of even the smallest steps forward being taken.

If, as I mentioned earlier, the true strength of an organisation is how it reacts when faced with a real test then the FCA needs to start taking active steps now as opposed to dealing with matters after the event.

By Rahman Ravelli’s Legal Director Syed Rahman