The value of alleged fraud reaching UK courts broke the £1 billion barrier in 2016, says an audit firm, which follows such cases. The firm says it’s due to a resurgence in ‘super cases’, cases where the value of alleged fraud is £50m or more. This is the first time since 2011 that alleged losses from fraud has exceeded £1 billion.
The KPMG ‘Fraud Barometer’ found that while the volume of alleged fraud for the year has dropped by nearly a third from 310 cases to 220, the value was up over 55 percent on last year’s £732 million – this year saw £1,137m of alleged fraud hitting UK courts. Consequently, the average value of fraud has more than doubled to £5.2 million from £2.4m. Fraud against businesses was up seven-fold this year with internal fraud committed by employees and management the most common type of fraud to hit businesses.
The figures include over £900m derived from just seven cases. The surge in super cases, from £250m last year, may be a reflection of fraud becoming a more lucrative and practical proposition for those with the right skills and technology, or those in senior commercial roles, the auditors suggest. Increased pressures both to deliver on targets in a highly competitive and uncertain environment and to preserve personal finances have made people more willing to disregard their moral compass and see fraud as a shortcut to success; and new opportunities for fraud that have largely been created by new technology, the firm adds.
Hitesh N Patel, UK Forensic Partner at KPMG, says: “The figures for 2016 tell us two things. Firstly, that we can expect more of these super frauds as challenging economic circumstances place pressures on businesses and individuals and as technology becomes more sophisticated. Secondly, that this is going to put even more strain on law enforcement agencies who don’t have the resources to investigate every report of fraud that they receive: getting the large, often cross-border and complex frauds to court is extremely time consuming and resource intensive. This places much more emphasis on businesses and consumers to protect themselves from fraudsters who will take advantage given the opportunity.”
Comment
James Richardson, specialist in Cyber Fraud, Business Payments and Financial Documents at Bottomline Technologies said: “It is concerning that just £1.1bn worth of fraud has been reported to fraud. Our research found that over a third of UK financial decision makers feared 10 per cent or more of their revenue has been impacted by financial fraud alone. By its nature, cyber-fraud, when discovered, is visible and quick to spot. However financial fraud can lay undetected for years. For financial decision makers of large businesses in particular, the greatest perceived threat is the internal exploitation of internal payments staff. Tactics include insider fraud and ghost employees.
“Businesses are often well informed of external cyber-fraud, such as the direct hacking of system, as high-profile breaches often hit news headlines. Consequently, some companies have invested disproportionate amounts into protecting their systems against cyber-fraud at the cost of internal vulnerabilities. Businesses must adopt a balanced approach when protecting against internal and external payment fraud.”
