Banks begin freezing accounts suspected of bounce back loan fraud
High street banks have started freezing business accounts suspected of bounce back loan fraud, according to reports.
Banks including HSBC, Barclays, NatWest and Lloyds have begun freezing accounts over concerns that loans were received fraudulently.
According to The Mail on Sunday, they have taken hold of up to £50,000 from the accounts of hundreds of customers. The newspaper reported that HSBC wrote to one customer, notifying them it had “formally terminated” a loan and instructing them to repay it in full immediately.
Read more: Government urged to use debt collectors to recover bounce back loans
The bounce back loan scheme, which delivers 100 per cent government-backed loans of up to £50,000 to smaller businesses, has delivered more than £43bn to over 1.4 million firms.
However, there have been many concerns around fraud and the possibility of a high level of defaults from the scheme.
The Office for Budget Responsibility has estimated that taxpayers could be left with a £29.5bn bill from bad debts caused by defaults in the 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 targeted this support to help those who need it most as quickly as possible and we won’t apologise for this.
“We’ve looked to minimise fraud – with lenders implementing a range of protections including anti-money laundering and customer checks, as well as transaction monitoring controls.
“Any fraudulent applications can be criminally prosecuted for which penalties include imprisonment or a fine or both.”
The National Crime Agency arrested three men working for a London financial institution as part of an investigation into fraudulent bounce back loan claims totalling £6m.
Read more: Lenders warned to expect 60pc of bounce back loans to default
Officers from the agency’s complex financial crime team apprehended two men, a 30-year old from Camden and 31-year-old from Mitcham, at their place of work and a 30-year old during a search of the address in Camden.
The NCA said each was released following searches and interviews whilst enquiries continue, and the fraudulent claims are believed to have been made through the use of false data and documents.
Enquiries are ongoing to establish the true extent of their activity and whether others are involved.
Read more: Three people arrested after being accused of bounce back loan fraud
“Ensuring the integrity of the financial sector is a vital part of our work to tackle illicit finance,” said Gary Cathcart, head of financial investigation at the NCA.
“Professional enablers who use their specialist knowledge to facilitate criminal activity represent 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.
