While regulators in America have been concerned about the problem for around 15 years, British authorities are now stepping up their efforts to crackdown on the illegal activity, reports the Financial Times.
The Financial Services Authority (FSA) has been working more closely with the Serious Organised Crimes Agency, which covers areas such as people trafficking, extortion and drugs.
Paul Evans, Soca's director of intervention, said: "I thought City fraud was in a sealed jar.
"[But] I think the water in which our criminals swim is pretty common to all kinds of criminal behaviors."
Earlier this week, the FSA banned five individuals for conducting insurance fraud and handed out a fine of Â£150,000 ($232,000) to one of them - Andrew Jeffery, director of Jeffery Flanders (Consulting) Limited.
By Tony Aynsley