Page last updated on Tuesday, November 29 2005 at 1448 UK
Organised crime groups have begun to place staff inside banks and other financial institutions so that they can learn their IT systems and identify flaws which could be exploited to commit fraud.
This is the warning from the chairman of the UK Financial Services Authority, Sir Callum McCarthy. McCarthy announced last week that the Authority was actively looking at ways to better share information on fraud.
"There is increasing evidence that organised criminal groups and placing their own people in financial services firms so that they can increase their knowledge of firms' systems and controls and thus learn how to circumvent them to commit their frauds" said McCarthy at a recent conference on financial crime.
Financial services institutions have already demonstrated their willingness to cooperate to reduce fraud, with the introduction of chip-and-PIN for debit and credit cards earlier this year. The UK Association of Payment Clearing Services (APACS) is now looking to build on this cooperation with two online sites which will allow banks to share information about fraud.
The sites will deal with details of staff linked to fraudulent activity and information about the beneficiaries of fraud respectively. Where such personal details could be exchanged, however, there is an clear need to look at the implications of data protection legislation.
"We need to be mindful of the legalities of share data" said a spokeswoman for APACS. "It is at the conversation stage rather than the implementation stage... Once the banks have assessed the feasibility of being involved then it will get to the point of putting up the database."
McCarthy acknowledged the importance of compliance with data protection legislation and emphasised that this should be an integral part of establishing links between the FSA, financial services firms and the work of law enforcement agencies.
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Text of the speech by Sir Callum McCarthy, Chairman of the FSA
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