Fourthline sat down with former fraudster-turned-researcher Jonathan Gilbert PhD to uncover the truth behind some of the most pressing questions in fraud prevention, from how it happens to how it can be prevented.
How Does Mortgage Fraud Happen?
The early 2000s brought a rush of lending activity that opened the door to widespread mortgage fraud. Lenders focused on volume, often ignoring red flags, failing to verify identities, and approving applications without proper checks. This environment made it easy for fraudulent activity to flourish.
Why Fraud Operates Like Organised Crime
Mortgage fraud works like an organised crime group, with a central client surrounded by a network of professionals—lawyers, valuers, accountants, and brokers. Roles may begin with passive involvement but often shift into active participation. Staying ahead of financial crime prevention requires constant creativity and adaptability. These professional networks exploit delays in system response, leading to large-scale financial harm.
The Personal and Financial Cost of Fraud
Jonathan offers a candid reflection on the personal toll of mortgage fraud. As the solicitor responsible for overseeing the final stages of transactions, he faced immense pressure when the fraud came to light. Although many individuals were involved, the responsibility ultimately rested with him.
“It was a living hell,” he says. “Every day I was just trying to stop the plates from crashing.”
How the Fraud Landscape Has Evolved
“After the financial crisis, the shutters came down. Now the shutters are creeping up again.”
Jonathan reflects on the shifting regulatory environment and the ongoing tug-of-war between enforcement and opportunity. While digitalisation and AI have strengthened defences, softening regulations open new doors for fraud. He emphasises the need to focus on fraud reduction, not just prevention, especially as bad actors adopt the same advanced tools.
What Truly Works in Financial Compliance?
Strong organisational culture, ethics, and investment in compliance are essential. Over the past decade, compliance teams have grown from small functions to key parts of fraud defence. This shift is crucial. It is not only about meeting regulations but about protecting organisations from fraud and money laundering. Companies must accept they are vulnerable and prepare accordingly. That means anticipating threats and putting the right tools and safeguards in place.
