Banks start freezing accounts suspected of loan repayment fraud

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According to reports, major banks have started freezing the accounts of companies suspected of loan repayment fraud.

Banks such as HSBC, Barclays, NatWest and Lloyds have started freezing accounts over fears loans were received fraudulently.

According to The Sunday Mail, they seized up to £50,000 from the accounts of hundreds of customers. The newspaper reported that HSBC had written to a customer, telling him that he had “officially terminated” a loan and asking him to repay it in full immediately.

Read more: Government urged to use debt collectors to recover repaid loans

The Bounce Back Loan Scheme, which offers 100% government guaranteed loans of up to £50,000 to small businesses, has provided over £43bn to more than 1.4m businesses.

However, there have been many concerns about fraud and the possibility of a high level of system defaults.

the The Office for Budget Responsibility has estimated that taxpayers could end up with a £29.5billion bill from bad debt caused by flaws in Covid-19 support schemes.

“Our loan schemes have provided a lifeline to thousands of businesses across the UK – helping them survive the pandemic and protecting millions of jobs,” a government spokesperson said.

“We have targeted this support to help those most in need as quickly as possible and we will make no apologies.

“We have sought to minimize fraud – with lenders implementing a range of protections including anti-money laundering and customer checks, as well as transaction monitoring checks.

“Any fraudulent claim may be criminally prosecuted and subject to imprisonment or a fine, or both.”

The National Crime Agency has arrested three men working for a London financial institution in connection with an investigation into fraudulent claims for repayment of loans totaling £6million.

Read more: Lenders warned to expect 60% of bounced loans to default

Officers from the agency’s Complex Financial Crime Team apprehended two men, a 30-year-old man from Camden and a 31-year-old man from Mitcham, at their workplace and a 30-year-old man during of a search at the address in Camden.

The NCA said each was released following searches and interviews as investigations continued, and that the fraudulent allegations were allegedly made through the use of false data and documents.

Investigations are underway to establish the true extent of their activity and whether others are involved.

Read more: Three people arrested after being charged with loan repayment fraud

“Ensuring the integrity of the financial sector is a critical part of our work to combat illicit finance,” said Gary Cathcart, head of financial investigations at the NCA.

“Professional facilitators who use their specialist knowledge to facilitate criminal activity pose a significant threat, and the NCA will continue to work closely with our partners to target anyone involved in fraud.”

The Treasury has been asked for comment.

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