Accident Claims Companies Could Be Bankrolling Terrorism

Accident claims companies are at the centre of a large-scale investigation by the Insurance Fraud Bureau, according to a report in Solicitors Journal. Many companies are under suspicion of colluding with solicitors firms in staging accidents and paying kickbacks in order to make money. Some of the fraudulent activity may have gone towards funding terrorism and drug dealing.

The process of paying kickbacks can be legal if there is complete transparency but not if the claims are revealed to be fraudulent, and while the IFB accepts that some solicitors may have been duped by accident claims companies they could still find themselves guilty of fraud through neglecting to keep thorough records.

Sue Jones, the IFB’s unit head, has warned solicitors to guard against this eventuality by making sure that they accurately record all transactions and referrals made to them by claims companies: ‘If insurers are saying, on a consistent basis, that they don’t believe that accidents are taking place, then you must review the situation. If you’ve paid a referral fee to a claims management company and you end up taking money into your client account from a fraudulent claim, then you could be facilitating that fraud. Some firms appear time and time again as being linked to claims management companies whose claims are rejected. You would think they would want to review the relationship.’

These sentiments were echoed by the Solicitors Regulation Authority, a spokesman for whom stated: ‘We continue to warn solicitors that they must be careful in their dealings with claims introducers. For instance, they must fully explain any referral arrangement to their client at the beginning. They must make sure they know how the introducer obtained the client and explained the financial arrangement.’

The more worrying side of the story relates to where the fraudulent proceeds are going, with the IFB saying that the investigation is tied up with money laundering and extremist violence. ‘A lot of the money goes abroad, including to terrorist groups in countries like Afghanistan and Pakistan,’ states Jones, adding that: ‘staged road traffic accidents were used to fund the IRA in the 1970s and 1980s. It was seen as an easy way to make money.’

Since its inception in 2006 the Insurance Fraud Bureau has been responsible for over 120 arrests and the retention of £5 million. Many of these breakthroughs have been in connection with the Proceeds of Crime Act of 2002, which states that: ‘it is a criminal offence for anyone to be involved in arrangements that they suspect facilitate (in any way) someone else in acquiring, retaining, using or controlling the proceeds of crime,’ and, more crucially for solicitors firms, ‘it is a criminal offence for anyone who works in a regulated financial firm not to report any dealing that they suspect, or ought to suspect, involves the proceeds of crime.’