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Fraud Offences Articles

A Guide to Bounce Back Loan Fraud

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Bounce Back Loans were established by the government in April 2020 to help small businesses survive the Covid-19 pandemic. 1.5 million loans were given out by the government, worth up to £50,000 each. The total value of the loans was £47 billion. The aim of these loans was to help struggling businesses, many of which had to close during the Covid-19 lockdown. The government purposefully minimised red tape surrounding obtaining a loan in order to accelerate the pay outs. However, certain individuals and illicit organisations exploited this in order to gain fraudulent loans.

The Department of Business has estimated that fraudulent loans to the value of £4.9 billion have been taken out. Bounce Back Loans have been in the news recently because the government has been criticised for taking inadequate steps to prevent this type of fraud from taking place. Although the government was aware of the risk of fraud, the decision was taken to proceed with a quick and simple loan application to minimise delay in paying out the loans to those in need. The National Audit Office has commented that the government only conducted limited verification, and no credit checks on borrowers, which made the scheme susceptible to fraud from small scale fraudsters to organised crime groups. Banks were not only discouraged from undertaking credit checks, they were actually prohibited from doing so. More jarringly still for the government, the state was responsible for losses linked to defaults or fraudulent applications for Bounce Back Loans.

This article explores the law surrounding Bounce Back Loan fraud. If you have been accused of this crime, read on to understand the legal elements of this offence and the punishment you could face if you are convicted.

What is Bounce Back Loan fraud?

Bounce Back Loans are a type of financial relief that the UK government made available to small businesses during the Covid-19 pandemic. Bounce Back Loan fraud is where individual fraudsters or organised criminals stole the identities of real people, set up fake companies, and claimed the maximum loan amount available of £50,000. As of October 2021, the government had received more than 2,000 reports of this type of fraud.

Note that if you are one of the many individuals who took out a Bounce Back Loan for your firm in good faith and are now unable to afford the repayments, you would not be guilty of fraud. In order to be convicted of fraud, a court would have to find that you acted dishonestly and purposefully misrepresented your situation.

Examples of Bounce Back Loan Fraud

The following are real examples of criminal cases concerning Bounce Back Loan fraud:

  • Two men who ran a £70 million money laundering scheme, of which £10 million came from bounce back loans, were jailed for 17 years and 16 years respectively. The men plus other individuals within their criminal network opened bank accounts in the names of fake companies they had set up. One bank lent them and their accomplices £3.2 million. The money was then sent between various shell companies before being transferred to various bank accounts abroad. As of December 2021, the police had only managed to recover £17,000 of the money that had been stolen. The men in this case faced long prison sentences because they played an influential role in a criminal organisation, and the amount of money that was defrauded was substantial.
  • According to the National Investigation Service (Natis), which is responsible for investigating fraud in relation to government loans, four people were arrested in July 2020 for conspiracy to commit fraud and money laundering offences. The individuals had used false information to set up fake companies, through which they had applied for loans from a number of different institutions. It is unclear if they have been convicted.
  • Natis has also reported that a man and a woman were arrested on suspicion of fraud and money laundering at Heathrow Airport in December 2021 in connection with fraudulent Bounce Back Loan applications. They were released under investigation, and it is unclear if they have been charged.

Which criminal offence is bounce back loan fraud?

The two criminal offences that are likely to arise in respect of Bounce Back Loan fraud are fraud and money laundering.


Bounce Back Loan fraud is an example of fraud by false representation, pursuant to Section 2 of the Fraud Act 2006. In order to be convicted of this offence in the context of obtaining a Bounce Back Loan, the prosecution would need to prove the following:

  • You made a false representation in your application for a Bounce Back Loan. At the time of making the application, you knew or believed that the representation that you made might be false. For example, if you used a false name or pretended to be running an active business, that would be a false representation.
  • As well as making a positive statement, a false representation could include the failure to say something.
  • You made the false representation in order to gain something for yourself or another, or in order to cause another a loss. This element of the offence would be met by the fact that you are seeking the loan in order to enrich yourself, or someone else.
  • You were acting dishonestly in making the application. To decide if you were acting dishonestly, the court will look at what information was available to you at the time that you were making the application, and whether your conduct was dishonest by the objective standards of ordinary Using a false name or identity, or registering a false company, would certainly be found to be dishonest.

Money Laundering

The other offence that is linked to Bounce Back Loan fraud is money laundering. The offence of money laundering is set out at Part 7 of the Proceeds of Crime Act 2002 (POCA). The definition of money laundering is: “The process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises.”

Once Bounce Back Loans have been fraudulently obtained, money laundering occurs where the fraudulently obtained funds are then ‘cleaned’ to make it look as though they have come from a reputable source. This could involve transferring the money through shell companies or buying and selling high value items such as property. If the CPS succeed in proving that the money came from a fraudulent Bounce Back Loan, in order to obtain a conviction for money laundering they would then need to show that the person converting the money knew or suspected that the money came from a fraudulent origin.

Could you go to prison if you are convicted of Bounce Back Loan Fraud?

You could face a prison sentence if you are convicted of Bounce Back Loan fraud. Fraud is an either way offence, which means that it could be heard in the Magistrates’ Court or the Crown Court depending on the seriousness of the offence and whether the defendant elects for the case to be heard before a jury.

In the Magistrates’ Court, you could receive a custodial sentence of up to 6 months or an unlimited fine. The Crown Court has greater sentencing powers than the Magistrates’ Court. If your case is heard in the Crown Court, you could face a custodial sentence of up to 10 years for the fraud aspect of your case. The maximum sentence for money laundering is 14 years’ imprisonment. With the possibility of these hefty prison sentences on the horizon, make sure you have the best available criminal defence team on your side.

When assessing the sentence that you will face the court will consider your culpability in the offence. In terms of culpability, a person playing a leading role in a criminal network will face a more severe sentence than a person who played a subsidiary role. If you were forced or pressured to become involved in the fraud, this would serve as a mitigating factor. The court will then consider the level of harm caused, which in the case of fraud is assessed by the value of the fraud. A fraudulent loan of the maximum amount, or attempts to secure multiple loans, would be considered more harmful than a loan application for a smaller amount, on just one occasion. The court would then consider general aggravating and mitigating factors before deciding upon the sentence. To see the full list of factors that could increase or reduce your sentence, see the Sentencing Council’s guide on fraud.

Where to get further help?

If you have been accused of Bounce Back Loan fraud, seek the advice of a criminal defence solicitor in whom you trust today. At Stuart Miller Solicitors, our team is highly experienced in defending white collar crime. We could even get your case dropped before it even gets to court. Contact us for a no obligation consultation today.

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