ICAI follow-up: Tackling fraud in UK aid: country case studies

Introduction

The Independent Commission for Aid Impact (ICAI) rapid review, Tackling fraud in UK aid: country case studies, was published in March 2024. During its Third Commission (2019-2024), ICAI conducted a series of rapid reviews on programme governance and counter-fraud measures in aid spending. This supplementary review built on findings and themes from the earlier reviews of fraud and governance, assessing the efficiency, effectiveness and coherence of the UK’s approach to detection of fraud risk. The review used a selection of country case studies including Kenya, India and Mozambique to assess how bilateral aid was managed by overseas UK government staff; how relationships with external stakeholders were handled; how staff implemented key systems and processes; and how the UK collaborated with partners overseas to identify, understand and address fraud risks. 

The review found that although the UK had a strong reputation for taking fraud seriously among its partners and other donors, under-investment in central anti-fraud teams at the Foreign, Commonwealth and Development Office (FCDO) left overseas staff lacking support and more vulnerable to fraud. The report stated that FCDO’s ambassadors and high commissioners had a mixed understanding of their responsibilities on fraud prevention regarding both programmes managed from the UK and those managed by other government departments. FCDO was found to be largely reactive rather than proactive in discovering fraud. Although the review found that the “finding fraud is good” message was starting to get through to staff and partners, many staff remained wary of the potential negative consequences of finding and reporting fraud concerns. 

Recommendations

The Tackling fraud in UK aid: country case studies review made four recommendations:  

Assessment of progress

ICAI has taken a tailored approach to following up on reviews from 2023-24. We wrote to FCDO in October 2025 and requested a formal update on each of the recommendations for the Tackling fraud in UK aid: country case studies review, detailing progress since the publication of the government’s initial response. We have published the government’s 2025 progress update on our website. ICAI also requested accompanying evidence of progress, which we have reviewed.  

ICAI has seen clear evidence that FCDO has made progress against all four of the original review’s recommendations. We have seen good evidence to show that FCDO is building a new internal fraud detection architecture based on Public Sector Fraud Authority governmental standards which form part of the recognised Government Counter Fraud Profession. Efforts have initially concentrated on fraud risk assessment. This is currently in progress, with some examples of this work set out in the remainder of this assessment. ICAI welcomes the continued development and implementation of this architecture. 

ICAI has seen clear evidence that in order to increase the robustness of its counter-fraud approach, FCDO has increased its number of counter-fraud policy staff and invested in professional development courses to build the capability of the team. Staff have also increased their professional engagement with cross-government and international partners to ensure awareness and utilisation of new counter-fraud standards and approaches. ICAI has also seen clear evidence of a new process to require Initial Fraud Impact Assessments (IFIAs) for business cases above specific financial thresholds and for instances where the Treasury require an IFIA as part of approval. FCDO informed us that these assessments are aimed at considering what the impacts would be should fraud occur, helping the organisation to better anticipate fraud and enabling prioritisation of prevention, deterrence or proactive detection. Strong evidence was also provided to show consistent fraud awareness campaigns and a programme of engagement during the annual fraud awareness week, with examples provided of positive feedback on the sessions. 

ICAI has seen good evidence to show that FCDO has strengthened its second line of defence with an increase from 80 fraud liaison officers (FLOs) in 2024 to over 300 in May 2025, as well as strengthened guidance for line managers and senior budget holders on the need to appoint FLOs in their areas and the importance of their role in tackling fraud. Clear evidence was provided to show that all top 20 official development assistance (ODA) recipient countries now have at least one FLO. 

FCDO also strongly demonstrated that it has performed extensive outreach work to promote counter-fraud good practice including through newsletters, emails, diplomatic telegrams (DipTels), online informational sessions and intranet pages highlighting relevant real-world counter-fraud examples. ICAI notes that with increased numbers of FLOs have come increased levels of reporting of potential fraud. There is currently a triaging system to manage the fraud caseload where the highest-risk programme cases are passed to FCDO’s Fraud Investigation Team, and lower-risk cases are managed by FCDO staff in first line roles (including both those at embassies and high commissions, and working in programmes) with guidance and support provided by the Fraud Investigation Team. Should FCDO experience sustained high caseloads there could be capacity challenges. FCDO informed us that it keeps this risk under regular review and has contingency arrangements which could be utilised if necessary, such as a drawdown contract to provide additional investigatory capacity.  

ICAI has seen evidence that counter-fraud and bribery training is now mandatory for all FCDO staff. We have also seen strong evidence that FCDO now has improved access to data providing oversight of staff training completion rates, meaning that low completion can be flagged and rectified. 

ICAI has seen clear evidence to show that a new development capital investment guide has been developed and added to FCDO’s Programme Operating Framework (PrOF).    

Strong evidence has been provided to demonstrate FCDO efforts to increase Head of Mission oversight and accountability for fraud risks, including through direct communications highlighting their counter-fraud responsibilities and the introduction of counter-fraud sessions in pre-posting training. ICAI has also seen strong evidence to show that financial reporting available to budget holders such as new online databases and AI capabilities, are being used to help with proactive fraud detection. Although we have seen evidence of efforts to increase oversight and accountability, we have not yet seen clear evidence to show the impact this has had. 

ICAI has been provided with the new counter-fraud strategy, which is currently awaiting final senior approval. Its publication has been disrupted by the FCDO restructuring process, with staffcurrently working to the old strategy. ICAI welcomes the approval and use of this strategy as soon as possible. 

It is positive to see the progress that FCDO has made since our review. Overall, the evidence presented portrays a picture of increasing maturity in FCDO’s approach to fraud and the risk of fraud in its development programming. However, some elements of this are still in progress and it is critical that the positive momentum is continued. In particular, as FCDO embarks on significant staffing reductions, sufficient and appropriate resource must remain deployed at the first, second and third line of defence with an increasing focus on the areas of highest risk; and senior managers with responsibility for spending must be absolutely clear about their accountability for implementation control, risk assessment and action on fraud. Finally, fraud risk is not static: as both the external context of risk changes and as FCDO works with different modalities and new approaches to partnership, it will be important for FCDO’s approach to fraud to continue to evolve and mature.