Whether it is cyber hackers, corrupt staff, kidnappers or vengeful former spouses, there's plenty for HNW individuals and their advisors to worry about. It all requires expertise forged over decades. We talk to Conflict International, an organisation operating in the space. It works with partners around the world, including in the US.
Sanctions against rogue states, threats from kidnappers, embarrassing social media posts, and crooked staff and fraudsters create a lot of challenges for private banks and high net worth clients. Firms which are able to solve these problems are in demand.
It’s certainly a busy time for Conflict International, a UK-based organization that was set up in 2008 by Mike LaCorte (pictured) and Jon Fawcett. CI has a core team of 25 agents in the UK, US, Spain and Cyprus. It draws on a network of over 100 specialist agents, who operate across various jurisdictions.
And this is a firm unafraid to make a public noise about the moves it thinks have to be made, such as making the job of a private investigator a licensed UK profession.
“The financial, wealth and private banking industry is one of our core client streams, and demand is rising as digital fraud grows more pervasive and sophisticated,” LaCorte told this publication. “We are involved in conducting comprehensive background checks, verifying identities, and performing thorough investigations into individuals and entities involved in financial transactions. Additionally, we play a significant role in the resolution process, such as locating lost or stolen digital and physical assets.”
The rise of this sector also shows how wealth management, and the rising compliance burdens and pressures it comes under, must often tap into third-party expertise. Dealing with staff background checks is one example – hiring a rogue or someone with a spotty reputation can be extremely expensive. Even small lies or unexplained gaps on a CV can spell disaster. Financial fraud and problems more broadly are a big cost threat. A report in late June by Kroll said that 69 per cent of global executives and risk professionals it surveyed expect financial crime risks to increase over the next 12 months with cybersecurity and data breaches as the primary causes.
Licences and labour
Doing all this work is labour-intensive: it requires a willingness to respect confidential information, persistence, a keen grasp of psychology, and a lot of common sense. The role of the private investigator is self-regulated in the UK. Some bodies, such as the Association of British Investigators (ABI) offer training and accreditations.
LaCorte, an investigator with more than 25 years’ experience under his belt, said the sector needs to be officially recognised as a state-licensed profession. He has been chairman of the World Association of Detectives.
A decade ago, the UK government introduced the Private Investigators Bill to weed out unscrupulous PIs and put the business on a more professional footing. The industry is still waiting as the bill did not go through. It’s frustrating, LaCorte said.
“As a business, we are in favour of further regulation and hope that the Private Investigators Bill receives the credence that it deserves. Regulated industries and technical standards help utilise faster economies of scale, strengthens competition, protects clients, and are easier to export internationally,” he said.
“Whilst we are taking steps to self-regulate, such as the recently-proposed Code of Conduct from the ABI [Association of British Insurers], which has been put forward to the Information Commissioner's Office (ICO) and will impose a set of guidelines on all PIs operating in the UK, internal regulation can only go so far,” he said.
It is easy to see why firms want to have a licensed status, given the financial size of the PI market globally – worth $18.2 billion in 2022, and forecast to reach $28.2 billion at the end of 2023 (source: Fact.MR). The US makes up about 35 per cent of that figure. Europe (exact figures aren’t given) is in approximately second place, with East Asia in third.
The range and variety of firms in this space, straddling risk-assessment, private investigation, and the like, is large. The aforementioned Fact.MR report noted that the private investigation services market is “unorganized” and there are “no rules that define the framework to carry out day-to-day business activities.”
There’s no doubt that much is at stake. Fact.MR said financial fraud in the US, for example, stands between $60 billion and $70 billion in false insurance claims alone. Businesses come in all sizes and types. At one level there are firms that provide a lot of high-level risk assessment and consultancy. Examples include Kroll, which covers fields from cybersecurity risk to investigations, compliance and ESG issues (yes, ESG is now part of the pattern). Another is Control Risks. With the PI field, an example from the US is IBM Investigations LLP, serving clients in Arkansas and Louisiana. Another is Apple Investigations, a licensed firm based in New Jersey.
In the UK, there’s Private Detective London which provides consultancy, covert surveillance, counter surveillance, corporate investigations, international surveillance, along with asset and vehicle tracking, matrimonial investigation, background checks, and more. An internet search unearths dozens of firms like this. In the US, PIs are typically state-licensed – more than 40 states, and the District of Columbia, do so.