GLOBAL: MULTI-JURISDICTIONAL: An Introduction to Fraud

Trends and Developments 

AI is a hot topic in all sectors of society, particularly within the realm of fraud. The fraud landscape is evolving, with AI being harnessed by both fraudsters and those engaged in fraud prevention. Fraudsters will increasingly exploit its capabilities, in particular its ability to clone voices and create deepfakes to impersonate business partners or employees and trick victims into diverting money to the fraudster.

We have already seen the success of text and email scams where individuals are duped into believing they are communicating with someone they know. Such scams will only become more persuasive when accompanied by a deepfake voice message or video call. The ability to understand who and what is real will increasingly become a fundamental challenge when conducting business.

On the other side of the equation, AI will play a pivotal role in the detection and prevention of fraud, analysing anomalies and detecting where manipulations have taken place. These AI-based prevention techniques are already widespread, and their ability to analyse vast amounts of data to detect fraudulent patterns and behaviours is expanding exponentially.

For years, banks have been under mounting pressure to tackle fraud. Now, the sophisticated security systems they have introduced are starting to bear fruit. The introduction of a mandatory reimbursement regime for certain APP frauds in October 2024 will further incentivize banks to put sufficiently robust fraud prevention systems in place. However, these must be balanced against the need to ensure a frictionless customer experience.

The focus is now shifting to the online technology sector to play its part. The UK government’s Fraud Strategy called on online technology companies to do more in the fight against fraud, and the Online Safety Act and voluntary Online Fraud Charter are significant steps forward in the adoption of measures to better protect users, but more will be expected of this industry.

Turning to other trends, crypto-assets will continue to feature centrally in fraud cases, both as a means of funnelling stolen assets and as the basis of the fraud itself as victims continue to be lured into investing in cryptocurrency scams. A particularly concerning trend is the convergence of crypto fraud and AI. Deepfake videos of high-profile celebrities are now being employed to lend legitimacy to these scams.

The Intervention of the Courts 

Even with robust fraud prevention measures in place, some high-value scams may slip through the cracks, exposing victims to significant financial losses. In such instances, the ability to swiftly obtain and preserve evidence becomes paramount, particularly when the mandatory reimbursement regime offers no recourse. Fortunately, the English legal system provides powerful tools for this purpose, namely the Norwich Pharmacal and Bankers Trust Orders. These orders empower courts to compel third parties, potentially located abroad, to disclose information crucial to tracing assets, identifying perpetrators, and building a successful case. Their successful application in several recent cases demonstrates their effectiveness in tackling cross-border fraud.

However, the case of Scenna v Persons Unknown makes it clear that such orders will only be made against foreign banks in exceptional circumstances. Some fraud cases, particularly cases of “hot pursuit”, may meet the required threshold but others will require action to be taken and remedies sought in the local courts where the entity is based. In such cases, a well-planned global strategy, implemented with a worldwide network of trusted fraud experts will be essential.

In crypto fraud cases, we have already seen the court’s willingness to intervene and to adapt well-established legal remedies to meet the needs of evolving technology. However, we expect to see further refinement and development of the law in this area. The initial wave of cases in this area primarily involved applications made without notice, whereas we are now starting to see more cases where the respondent is taking an active part in defending the application. Cases such as Piroozadeh v Persons Unknown have seen the courts grapple with the details of how crypto-assets are held by cryptocurrency exchanges and the impact of that on the legal remedies available. We expect to see further refinement of the position as more cases appear before the courts.

The Future 

International asset recovery is by definition an area where those tasked with asset recovery are always playing catch up. By the time the victims of fraud realise they have been cheated, those responsible have already spent weeks or maybe months planning how to dispose of their ill-gotten gains. As the value of assets capable of being stolen increases exponentially, so does the complexity of the task facing asset recovery professionals.

Lawyers in this field need support from international governments as well as their civil and criminal courts. In particular, judges need to take a flexible approach towards the creative use of the legal tools within our respective legal systems to help in the fight against commercial fraud and corruption. At the same time, asset recovery professionals must constantly innovate, testing the limits of legal frameworks and leveraging technological advancements to tilt the scales in favour of victims.