Analysis of Fraud in UK Banks

Fraud remains an ongoing and growing issue in the UK financial sector. £1.17 billion was stolen by criminals due to bank fraud in 2024, with over 3.13 million cases of unauthorized fraud reported. In fact, fraud accounts for 41% of all crime in the UK, which demonstrates its overwhelming impact.

This article provides an analysis of UK bank frauds, discussing recent trends and common bank frauds in the UK. Banks are also trying to make their systems stronger, yet fraudsters don't stop evolving. Let's get started.

Definition of Fraud in the Banking Sector

Fraud involves deliberate deception for financial gain, and in banking it covers a range of schemes. The UK’s Fraud Act 2006 defines fraud as involving dishonest conduct related to making a false representation, failing to disclose information, or abusing a position. Specifically, it outlines three ways of committing fraud: by false representation, by failing to disclose information, and by abuse of position. Bank fraud can be external (perpetrated by outsiders) or internal (inside jobs). For example, internal frauds in banks often occur when employees misuse systems to steal funds or data. Internal frauds in banks, for example, include collusion to approve fictitious loans, embezzlement of customer deposits, or unauthorized transfers from accounts. External frauds include phishing, card fraud, account takeover, and scams where customers are tricked into transferring money. Overall, banks are a vital line of defense in the collective fight against financial crime, and when fraud breaks out, a bank fraud investigation is carried out. The process typically involves detecting suspicious transactions, verifying customer claims, tracing funds, and liaising with regulators and law enforcement. 

Current State of Fraud in UK Banks

UK banks continue to face significant fraud challenges in 2024, with over £1.17 billion stolen. While this figure is similar to that of the previous year, it masks notable shifts in fraud patterns. Criminals are constantly evolving—when banks strengthen controls in one area, fraudsters quickly shift to exploit new vulnerabilities. This ever-changing environment requires advanced, technology-driven fraud prevention strategies.

Geopolitical events have further amplified the risks. Since Russia’s invasion of Ukraine in 2022, UK banks have seen a threefold increase in Suspicious Activity Reports (SARs) related to sanctions breaches and illicit financial flows. Between 2022 and 2024, banks and payment providers were responsible for filing over 80% of the UK’s suspected sanctions breach reports, reflecting their central role in monitoring financial crime.

As a result, regulators such as the FCA and PRA are placing increased pressure on banks to automate sanctions screening and strengthen KYC procedures, particularly for politically exposed persons (PEP). A key example is Monzo Bank, which was fined £21 million in 2025 after investigators found that individuals had opened accounts using obviously fake addresses. This case highlights how weak onboarding controls can allow both fraud and money laundering to flourish undetected.

This evolving threat landscape demands more than traditional tools. It calls for an end-to-end fraud prevention and compliance solution, one that integrates real-time detection, automated screening, and seamless regulatory reporting to stay ahead of financial criminals.

Interesting read: Navigating AML Compliance Regulations for 2025
 

Types of Fraud in UK Banks

Banks must defend against many schemes. Key common bank frauds include:

1. Authorized Push Payment (APP) Scams: Victims are tricked into sending money to a fraudster’s account.
 

2. Remote Purchase (Card-Not-Present) Fraud: Using stolen card details online or over the phone. Criminals exploit weak remote authentication to make many small transactions.
 

3. Payment Card Fraud: Fraudsters use a stolen card (or cloned details) to make purchases.
 

4. Identity Theft/Account Takeover: Criminals steal personal info to open new accounts or hijack existing ones. They may apply for loans or cards in someone else’s name. Enhanced KYC checks and biometrics can mitigate this risk.

5. Cheque and Mandate Fraud: Forged or stolen cheques and fake payment mandates are used to deceive banks and businesses.
 

6. Insider Fraud: Employees abusing system access to embezzle money. Internal bank frauds often involve collusion or exploiting loopholes. Banks reduce this risk through the separation of duties, access controls, and background checks for employees.

7. Money Mule Schemes: Scammers utilize unwitting individuals to transfer stolen money, which complicates detection.


Each type of fraud has a bank fraud investigation process: identify anomalies, trace transactions, and collect evidence. For example, when a customer reports a suspicious debit (triggering a bank fraud investigation), banks suspend accounts, check CCTV/employee data (if an insider is involved), liaise with law enforcement agencies, and apply data analytics to look for linked accounts.

Conclusion

To stay ahead, institutions need a unified solution for fraud prevention and compliance, precisely what Youverify offers. By combining advanced AI-driven transaction monitoring, continuous KYC/AML screening, and real-time analytics, banks can detect suspicious behavior earlier, reducing total losses; cut investigation times in every bank fraud investigation; meet evolving FCA and PRA expectations without bolting on siloed tools; and protect customer trust while minimizing false positives. To get started, book a demo today.