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White-collar crime: public institutions hit hardest – strong rise in the Lemanic Region

Press release: Forensic Fraud Barometer

According to the most recent “KPMG Forensic Fraud Barometer”, white-collar crime in Switzerland caused a total of CHF 355 million in losses in 2020, with fraudsters targeting public institutions most frequently. While the strong increase in the number of offenses in the Lemanic Region is striking, there has also been a sharp increase in the number of offenses committed by private individuals, as well. Tax-related offenses caused the largest losses.

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Dominik Weber

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KPMG Switzerland

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Last year, Swiss courts heard 52 cases of white-collar crime involving a minimum loss amount of CHF 50,000 and total losses of CHF 355 million, four cases more than the previous year but with a slightly lower total loss amount (2019: CHF 363 million). The average loss sustained per case declined slightly to CHF 6.8 million in 2020 (2019: CHF 7.7 million). However, since experience shows that many cases are never even reported, the actual figures for white-collar crime are likely to be several times higher.

Public institutions hit hardest

With 20 of the 52 cases that were tried in court, public institutions were targeted particularly frequently. “Crimes affecting public institutions mostly relate to cases of insurance and social security fraud,” explains Anne van Heerden, Head of Forensic at KPMG, and adds: “In 2020, we also saw cases of money laundering, disloyal management (“ungetreue Geschäftsbesorgung”) and tax fraud fairly frequently compared to the other offenses.” In terms of the losses sustained, however, insurance and social security fraud plays merely a secondary role. While the eight cases of insurance and social security fraud might represent 40 percent of the white-collar crimes committed at public institutions, they involve a loss of CHF 8.5 million, meaning that they account for less than five percent of the total losses of CHF 203 million. One single case of tax fraud, on the other hand, involved an amount of more than CHF 72 million or a third of the total losses incurred by public institutions.

Private individuals and commercial enterprises also found themselves confronted with enormous criminal energy: Compared to the previous year, the number of cases tried in public rose from 16 to 22 for both of these victim groups and the loss sustained nearly quadrupled from around CHF 34 million to approximately CHF 130 million. Only one case involved a financial institution as the victim.

Fig. 1: White-collar crime by victim
White-collar crime by victim

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Strong rise in white-collar crime in the Lemanic Region

Geographically speaking, the Lemanic Region was hit hardest by white-collar crime in 2020 and reported 19 cases or 40 percent of the total offenses and more than a third of the losses. Remarkable is the strong increase in the number of convictions in the Lemanic Region, which had reported 13 cases in 2019. The second-highest number of cases was seen in the regions of Zurich and Eastern Switzerland, which reported eight each.

By comparison, Northwest Switzerland, with two offenses totaling CHF 1.3 million, as well as Ticino, which had just one publicly prosecuted offense in the amount of CHF 15 million, were not affected as severely. The four cases tried before the Federal Criminal Court in Bellinzona involved a total loss of CHF 43 million. At CHF 20 million, the average loss was by far the highest in the “Mittelland” region, as in the previous year, where three cases caused a total loss in excess of CHF 60 million.

Fig. 2: White-collar crime by region
White collar crime by region

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Substantial increase in private individuals as perpetrators

As in 2019, most white-collar crimes were committed by professional fraudsters in 2020 (19 cases). Contrary to the previous year, however, when the management and staff ranked second and third in this respect, private individuals were the second-largest group of perpetrators based on the number of offenses (13 cases). Only three offenses were attributable to private individuals in the previous year. Another aspect that stands out is the sudden increase in the total loss amount attributable to this group of perpetrators: While this group was responsible for losses of CHF 2 million in 2019, that amount skyrocketed to more than CHF 144 million in 2020. This sharp increase is due to three major cases that together caused a total loss of around CHF 130 million.

While organized crime might seem negligible with only one offense, the loss of this case amounted to CHF 31 million, meaning that this type of crime was responsible for the largest per-case loss amount. Viewed across all perpetrator groups, the average loss amount was CHF 6.8 million, down from CHF 7.7 million in the previous year. Nine of the 52 cases caused a loss of over CHF 10 million each.

Fig. 3: White-collar crime by perpetrator
White collar crime by perpetrator

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Majority of losses attributable to tax fraud

Broken down by the type of offense, disloyal management and embezzlement (ten cases each) were among the cases most frequently treated in courts in 2020 and together accounted for more than 40 percent of the losses incurred throughout Switzerland. Looking at the average loss per case, a different picture emerges. Disloyal management and embezzlement caused an average loss of “merely” CHF 8.3 million and CHF 6.9 million, respectively. This is approximately equivalent to the average loss amount across all cases, which comes to CHF 6.8 million. By contrast, offenses related to tax fraud came in at an average of over CHF 30 million and this figure was CHF 20 million for cases of corruption. 

Fig. 4: White-collar crime by type
White collar crime by type

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Methodology

The KPMG Forensic Fraud Barometer covers all court cases tried in public and reported in the media over the course of the year. Data for the study was compiled by analyzing more than 5,000 relevant articles from several different Swiss media outlets in 2020. The current edition of the KPMG Forensic Fraud Barometer only included articles concerning cases of white-collar crimes that have resulted in convictions and involved losses in excess of CHF 50,000. (The figures for 2019 have been retrospectively restated due to a more detailed breakdown of the categories.)

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