Laura Eshelby, Head of Economic Crime, Clue Software
Fraud is rarely isolated to a single transaction, entity or even investigation. It thrives on fragmented data and complexity between systems, teams and organisations. The collapse of Market Financial Solutions (MFS) is a clear example of this, with the FCA enforcement investigation revealing a host of complexities and bottlenecks, which investigators and regulators face in managing fraud risks, indicating a need for a more connected approach.
Fraud networks rely on this complexity as cover, spreading activity across legitimate-looking businesses, financial relationships and jurisdictions to make the wider pattern harder to identify. That complexity has not only made fraud harder to detect but has also exposed blind spots in how financial crime risk is monitored and regulated.
While bodies such as the Financial Conduct Authority (FCA) have historically focused on authorised and registered financial institutions, examples like MFS show how fraud risk can build in areas that have faced less scrutiny, including unregulated lenders and Annex 1 firms. This also builds the importance of governance acts, such as the Economic Crime and Corporate Transparency Act (ECCTA), the introduction of which have increased the need for security beyond regulated firms alone.
Together, the collapse of MFS, FCA action and the wider direction of the ECCTA have put renewed scrutiny on the parts of the financial system where fraud risk can build without being easily seen. To stay ahead, organisations need to understand where they are exposed, connect intelligence across a fragmented system and show their controls work in practice.
The reality: fraud is an engine that relies on hidden activity
Operation Admiral 2, one of Europe’s largest VAT fraud cases, demonstrates how expansive major fraud schemes can be. It involved more than 400 companies across 15 EU states, defrauding the Portuguese tax authorities of €80 million. At that scale, fraud investigators are at a steep disadvantage in detecting criminal activity, especially as each transaction and component looks plausible in isolation.
These operations continue to take the form of connected enterprises, relying on intermediaries, specialists, front companies and logistics networks to fly under the radar. The complexity of these operations, and the continuous addition of more elements and links allows illicit activity to appear routine as when scrutinised individually, transactions, customer relationships or lending arrangements appear legitimate and professional. Their criminal nature can only become visible if investigators can consolidate information and make connections between disparate signals spanning multiple locations, entities and even points in time.
Disconnected intelligence leads to gaps in investigations
Fraudulent operations routinely exploit distance, fragmentation and jurisdictional boundaries to their advantage. For investigators, that creates a very practical challenge. When teams are working across borders, agencies and systems, collaboration becomes harder, and the full picture is easier to miss.
The result is siloed data and, with it, missed opportunities to identify and arrest offenders.
To stay ahead, organisations need to make sure their governance and compliance frameworks are robust and broad enough to cover every part of the infrastructure they rely on. This is not simply a question of spending more on compliance. UK financial institutions already spend billions on fraud compliance, yet successive enforcement action shows the same failures recurring year after year.
This issue is often visibility. Fraud touches multiple systems, processes, and risk areas, , from transaction monitoring to risk mapping and anti-money laundering and the current systems are not designed to track and prevent this.
Compliance checklists have an important role, but they are not a substitute for effective protection. Fraudsters understand how these systems work and can exploit the gaps between them. Closing that gap means testing whether frameworks work in practice, not just whether they exist on paper.
It also elevates the importance of sharing intelligence and data beyond single organisations. criminals don’t see boundaries, which requires close coordination and cooperation between enforcement entities.
Fraud spans entities, locations and points in time
Effective fraud investigations cannot stop at the point an individual case is closed. Criminal operations are not isolated, and incidents are not standalone; they are interconnected, efficient and effective, and investigators need to work with the same mindset. New intelligence, emerging patterns and links to other cases can fundamentally change the significance of information that previously appeared unrelated or low-risk.
Investigations therefore need to be treated as continuous intelligence cycles, with information regularly revisited to help draw new links and re-evaluate progress as evidence emerges. That means taking a step back and looking at the bigger picture of how these operations work and being willing to go back through cold or closed cases where a connection might exist.
To work in practice, that bigger-picture view needs to be supported by technology that can connect the dots as quickly as criminal networks create them. The right systems cut through the noise and consolidate fragmented information, allowing enforcement agencies to build reliable connections between hidden links and collaborate far more effectively.
Building resilient intelligence to destabilise fraud operations
The collapse of Market Financial Solutions is about more than one lender failing. It points to a broader challenge facing investigators, regulators and financial institutions alike: fraud risk rarely emerges inside a single transaction, organisation or investigation. Instead, it develops across interconnected networks of entities, relationships and financial activity. And the intelligence needed to identify those risks is often scattered across systems, teams and organisations, making the full picture harder to see.
Modern fraud networks are built to exploit that fragmentation. Activity is distributed across multiple entities, jurisdictions and intermediaries so that individual signals appear less relevant when viewed in isolation.
As regulators sharpen their scrutiny of financial crime risk, the challenge is no longer just about collecting more data or investing in additional controls. Investigators need to be able to connect information across cases, organisations and jurisdictions to build a complete picture of criminal activity.
That requires closer collaboration, better intelligence sharing and technology capable of surfacing relationships that would otherwise stay hidden. The ECCTA widens the room for that sharing, but only by reducing fragmentation can organisations improve their ability to identify, investigate and prevent fraud before significant harm occurs.