Aga Khan Economic Planning Board for the United Kingdom
Fraud Awareness (Last Updated: 10 March 2020)
The Jamat should be aware of emerging consumer fraud activity taking place in the UK, in particular around the Coronavirus as well as taxes. Furthermore, in the current environment where Jamati members may be looking to rebalance investment portfolios, the Jamat is encouraged to conduct thorough research in prospective investments to mitigate risk of fraud.
According to the National Fraud Intelligence Bureau, there have been over 20 cases of coronavirus-related fraud in the UK in the last month, totalling close to £1m. Examples include fraudulent websites claiming to sell Coronavirus protective equipment such as masks, ticket fraud relating to non-existent cheap flights and Coronavirus related phishing emails asking for sensitive information. The Jamat is reminded to exercise caution when making any online purchases and to try and transact on reputable webpages only with long track records and strong reviews.
In the UK, unauthorized financial fraud losses across payment cards, remote banking and cheques totalled almost £1bn in 2018, an increase of 16% compared to 2017. A common form of fraud experienced by nearly 1 million people in the UK today is fake calls, texts or email from criminals posing as tax authorities and demanding a payment. The Jamat is encouraged to be vigilant of such calls and follow advice from HMRC to prevent becoming a victim of such a scam:
- HMRC will never contact you over the phone and ask for your bank information
- HMRC will never notify you of a tax rebate or offer you repayment by email or text
- To protect yourself, never reply to text messages, download attachments or click on links in texts or emails which you are not expecting
- If you get a call requesting payment and aren’t sure if it’s real, visit HMRC’s self-assessment website and check your tax details online
Fraud can also extend into the business world and the Jamat is reminded to follow best practices when investing in public and private companies.
- Avoid speculation and anchor investments on financial attributes
- Do your homework, always understand the risk / reward
- Private investment
- Do not invest only because someone told you to or because you know someone else has invested. Conduct your own due diligence before committing funds into an opportunity – review audited financial statements and official documents, talk to management, prepare your own valuation, etc.
- Be wary of opportunities that promise excessive returns with little risk: if something seems too good to be true it probably is.
- Ensure you are protected with written agreements.
- Public investment
- Relying on stock tips without conducting your own analysis and research increases risk
- Public companies can also be fraudulent – even if a financial advisor encourages you to invest in a company it is a good idea to conduct your own research by reading the company’s annual report. Keep an eye out for red flags such as limited free cash flow, complicated structures, high financial leverage, and management with poor track records
- Seek support
- Investing can be complicated, do not be afraid to ask questions. Feel free to reach out to AKEPB with investment-related enquiries