Failure to Prevent Fraud – What You Need to Know

The UK Government has introduced a new offence under the Economic Crime and Corporate Transparency Act. Here’s what it means for you.

What is Fraud?

‘Fraud’ has a broad meaning in UK law. Many types of behaviour can be prosecuted as fraud, but the basic requirements are:

• an untrue statement or improper action;
• made with knowledge of the improper behaviour;
• which causes harm or loss to someone, or is made or done for your benefit. 

Examples include making exaggerated claims about products or providing false information to smooth the onboarding process. The new offence requires that there is an underlying fraud by an associated person (which may include introducers to BNP Paribas Leasing Solutions in some circumstances).

It is expected that prosecutions of individuals and businesses for fraud will increase significantly as a result.

What is the New Law?

The UK Government have introduced a new criminal offence under the Economic Crime and Corporate Transparency Act: Failure to Prevent Fraud.

This law makes organisations criminally liable if an employee, agent or associated person commits fraud intending to benefit the organisation, and the organisation fails to take reasonable steps to prevent it.

BNP Paribas Leasing Solutions is within scope of the offence as an ‘organisation’, and this communication serves to remind all introductory sources of the fraud risks faced and the standards of behaviour expected when providing services on behalf of BNP Paribas Leasing Solutions —regardless of whether an individual is formally an ‘associated person’ under the new offence.

What this means for you:

• Accountability: Organisations introducing business to BNP Paribas Leasing Solutions are expected to maintain robust measures to prevent fraudulent activities—both in applications and in the conduct of staff providing services to or on behalf of BNP Paribas Leasing Solutions. Such measures may include fraud prevention procedures (including internal fraud), an employee code of conduct, and whistleblowing procedures.

• Individual Responsibility: Every employee, whether part of the introducing organisation or BNP Paribas Leasing Solutions, plays a crucial role in identifying and preventing fraud. BNP Paribas Leasing Solutions offers a fraud training video and can deliver training sessions to teams upon request. For further information, please contact your usual business contact.

We take this opportunity to remind you that we have a Whistleblowing Platform on our website, open to all external parties to speak up if they suspect any actions or behaviours relating to any violation of laws or regulations –  EthicsPoint – BNP Paribas Group

• Zero Tolerance: Any fraud committed by introductory sources will be taken seriously and may result in termination of the business relationship.

Fraud linked to the financing of equipment is constantly evolving. It is in everyone’s interest to work together to prevent fraudsters from harming our businesses and those of our customers.

Being prosecuted for fraud or accused of fraud as part of a failure to prevent fraud enforcement against BNP Paribas Leasing Solutions would have a significant impact on you personally and professionally. Fraud can also impact you financially and reputationally.

Collaboration is key to detecting and stopping fraud before an application is finalised.

Fraud Risks to be aware of:

• AGGRESSIVE SALES TACTICS

A salesperson tells a customer that the current offer is the best available and may expire if not accepted promptly, despite knowing that other customers have received better pricing and that the offer is standard and will not be withdrawn.

This approach, intended to close the deal, could be prosecuted as fraud by false representation under the Fraud Act 2006. If the salesperson is an associated person to BNP Paribas Leasing Solutions, there is a risk that BNP Paribas Leasing Solutions could be prosecuted for failing to prevent this behaviour.

• ASSISTING FRAUDULENT ACTIVITY

A staff member encourages an applicant to alter accounting data in supporting documents to present a more financially viable position.  In this scenario, the applicant commits fraud by false representation, and the associated persons staff member assists in the offence.

If this is done to benefit BNP Paribas Leasing Solutions and the staff member is an associated person, BNP Paribas Leasing Solutions could be prosecuted for failing to prevent the behaviour.

There has been considerable publicity around the new offence, so it is expected that customers may raise more issues about potential fraudulent statements during the sales process. Any such complaints should be dealt with appropriately, and BNP Paribas Leasing Solutions should be kept informed.

Here’s a reminder of other types of fraud that can affect us:

• FRONTING

A customer’s application is declined so the customer re-submits the application in a family member’s company or another associated company, knowing that the asset is to be used by the original company which was declined.

• CUSTOMER AND / OR ASSET DISAPPEARANCE

A customer stops paying rentals and disappears with the asset or refuses to disclose where the asset is. In both cases we consider the customer has stolen the asset: theft is classified as fraud.

• APPLICATION FRAUD

A contract goes into arrears in the first 6 months of set-to-live. The client had no intention of paying and the application is deemed fraudulent.

• IMPERSONATION

An external fraudster impersonates a genuine individual or company to pose as a customer or a supplier (or both) to obtain assets or money for financial gain.

• MULTIPLE FINANCING

A customer has an asset already on finance with a finance company. They contact a supplier or business introducer to arrange for a re-finance. The supplier, business introducer and finance company are not aware that the asset is already on finance.

Detecting Fraud: What to Look Out For?

Our 10 point checklist:

1. Is the customer new, and are they being met in person?
   
2. If an application is declined, is the customer asking for it to be resubmitted under a different company name?
   
3. Is there clear communication with the customer via an official telephone number or email address?
   
4. Does the customer or supplier website and email look genuine? Is the website only recently created?
   
5. Do the company and directors have an online presence?
   
6. Does all paperwork (e.g., bank statements, proof of ID) look genuine? Have originals been seen and necessary checks performed?
   
7. If there is a change to the application, is there reason and justification?
   
8. Is the equipment being delivered to the customer premises?
   
9. Is the asset relative to the size or activity of the business?
   
10. Is the customer making multiple applications in a short time period?

Reporting a Fraud/Suspicion of Fraud

Introductory sources and staff are the first line of defence against all types of fraud. If any facts constituting fraud or significant suspicion of fraud are identified, these should be reported to the usual business contact at BNP Paribas Leasing Solutions. BNP Paribas Leasing Solutions will inform the reporting party of any actions taken.

Together, we can prevent fraud and protect our businesses.