GLOBAL: MULTI-JURISDICTIONAL: An Introduction to Fraud

Injunctive Relief

As we approach the 50^th anniversary of the first freezing order granted in England and Wales (or the “Mareva injunction”, as it was initially known), we are reminded of how the nature of fraud has changed over the intervening years. The original Mareva injunction was granted in a dispute over unpaid shipping charter fees. Today's freezing orders are more likely to be granted in AI-driven multi-jurisdictional frauds where assets (often in the form of cryptocurrency) are spirited across the globe in fast-moving transactions.

Whilst the mischief that freezing orders were designed to prevent has remained the same, the scope of freezing orders has expanded as the courts have adapted this form of injunctive relief to the changing world around it. We have seen freezing orders granted against persons unknown to cater for the increasingly anonymous online world in which we operate, and the scope of the order expanded to include assets held “legally, beneficially or otherwise” to accommodate the complex structures in which wealth is now held. Other changes have also been significant: the requirement for asset disclosure to be provided – once a power to be exercised sparingly – now forms a critical part of the standard order in England and Wales. The increasingly global nature of fraud has also been accommodated as worldwide freezing orders become the default, and cases such as Broad Idea International Limited v Convoy Collateral Limited (the “Broad Idea” case) demonstrate the willingness of courts to support proceedings in other jurisdictions.

As we move beyond the 50^th anniversary, we can expect to see further change in the scope of freezing orders and the circumstances in which they are granted as the courts continue to adapt to a rapidly evolving world.

Last year saw the alignment of the test for freezing orders in England and Wales with that for American Cyanamid injunctions. It will be interesting to see what, if any, impact this has on the readiness with which freezing orders are granted. We also continue to watch the impact of the Broad Idea case and how the enforcement principle elucidated in that case will impact on the scope of freezing orders across common law jurisdictions.

We also expect to see the standard search orders and imaging orders being combined into one order in England and Wales this year, as the court committees recognise that – as the majority of data is now held electronically – it would be highly unusual for a search order to be granted without imaging provisions being incorporated.

The Continued Rise of AI

AI continues to be a hot topic, with AI technologies predicted to drive an increase in both the volume and sophistication of frauds. Deepfake frauds deploying video and voice cloning will continue to gain traction as the technologies become more affordable and more accessible, and the output more convincing. Several large companies have already fallen victim to deepfake CEO fraud, and businesses will need to keep apprised of the latest developments and ensure that employees are aware of the risks and that their systems are robust and equipped to deal with the latest threats.

A further indirect challenge presented by AI is the risk of deepfake evidence being deployed in legal proceedings. This includes not only the risk of falsified evidence being admitted but also the issues caused by the mere possibility of an argument that evidence is a deepfake – the “plausible deniability” it offers to fraudsters who may exploit its existence by inaccurately claiming that genuine evidence is a deepfake. We are beginning to see such evidence seep into court cases, and legal communities in various jurisdictions are starting to grapple with how the rules on admissibility of evidence may need to evolve.

The Role of Banks

Banks continue to be expected to play a significant role in the fight against fraud. In the UK, a mandatory reimbursement scheme has been introduced for victims of authorised push payment fraud (with a maximum reimbursement limit of GBP85,000), with sending and receiving banks sharing the liability 50/50 between them. As the scheme beds in, it will be interesting to see what effect it may have on detection and prevention strategies deployed by banks, including whether the shared liability will encourage more data sharing between banks to prevent fraud. In late 2024, the UK's Information Commissioner's Office issued new guidance, encouraging organisations to share personal information to protect their customers from scams and fraud provided such sharing was carried out responsibly. The new guidance contained practical advice to provide clarity on data protection considerations and to support organisations in sharing data responsibly.

Other jurisdictions are also considering new scams prevention frameworks, calling on banks, telecommunication providers and online companies to work together as part of a wider “ecosystem” to detect and prevent fraud.

The Response

Whilst much has changed over the last 50 years, in one sense the advice to clients remains the same: act quickly and devise a global strategy with the assistance of experienced international asset recovery specialists who understand the tools available and are willing to think creatively and push the boundaries of what the law has on offer.

As the technologies being deployed by fraudsters develop, so too do the technologies being used by those who seek to prevent and detect fraud. AI-enabled tools to detect fraud are already widely used and are continuously being developed, particularly in the area of deepfakes.

The courts have already demonstrated their ability and readiness to adapt to the changing world around them, and we expect that trend to continue as we look forward to the next 50 years. Courts will remain willing and able to evolve, and to adapt their remedies to ensure that they continue to provide effective redress to victims of international fraud, whatever form that may take.