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Alleged fraud for 2019 has reached over £1 billion

Alleged fraud for 2019 has reached over £1 billion

The 6th largest value recorded in the Fraud Barometer's 33 year history.

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Roy Waligora

Partner, Head of Investigations and Corporates Forensics

KPMG in the UK

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Sophisticated cyber-crime combined with traditional old school frauds have pushed the value of alleged fraud cases hitting UK Courts in 2019 to over £1 billion. Fraudsters went back to basics targeting commercial businesses and the general public as over £1 billion hit UK Courts, with alleged cases of insider fraud against businesses more than doubling in value compared to 2018. 

Over £192 million of alleged fraud against businesses involving traditional embezzlement against employers, manipulating accounts or abuse of position appeared in UK Courts in 2019 compared to £109 million in 2018.

“Following a very busy year for both the fraudsters and law enforcement, it is crucial that businesses and the general public remain on high alert against fraud as uncertain times breeds opportunity. In the current economic environment, disruption, change and uncertainty are all triggers that can lead to an increase in the risk of fraud and businesses should have heightened awareness of their fraud controls.

The general economic uncertainty will also put pressure on usually law abiding staff to take risks they might not ever have normally taken. Consequently many businesses face an increased ‘threat from within’ coupled with a seemingly exponential rise in external threats. Employers need to be more robust with screening for new employees and third parties. Individuals who have inside knowledge of a business will often be the ones to identify the soft spots of a company’s defences for their own advantage.”

Roy Waligora, KPMG UK Head of Investigations.

Tech-enabled frauds which came through strongly in the first half of the year continued to drive fraud levels in court for the rest of the year and there were a number of large cross-border scams involving criminal gangs across a number of countries. Alleged fraud cases against the public were also up from £40 million in 2018 to £63.8 million although the number of cases decreased (79 in 2018 to 67 in 2019).

“These figures show that the courts are dealing with an increasing value of frauds afflicting both businesses and individuals, something which is consistent with other data that shows that fraud constitutes a third of all crime in the UK. The significance of the threat to the UK’s prosperity and the impact on victims were acknowledged by the Government in its Economic Crime Plan in July. This wide ranging plan contains a large number of welcome commitments but they will need to be delivered on by the next government if there is to be any discernible impact on the level of fraud in the long term.”

Mark Thompson, UK Investigations Director at KPMG, formerly the Chief Operating Officer of the Serious Fraud Office.

There are, and have been, extensive fraud awareness campaigns by anti-fraud groups and banks to stop people handing over valuable personal data, but frauds targeting consumers such as high-yield investment scams and pension liberation frauds continue to proliferate as they are enabled by the ease of communication, email and social media. Such frauds can have life changing financial consequences for victims who are robbed of financial security. However not all fraudsters sit behind a computer screen and we have seen frauds by rogue traders increase. The personal nature of this fraud often leaves victims feeling very distressed and many will never recover financially or emotionally from the deceit. There are things people can do to protect themselves and their vulnerable friends and relatives from fraudsters, particularly rogue tradesmen, such as never parting with money up front, not welcoming uninvited callers into their homes, asking for ID and checking if they are registered in their profession.

The value of fraud last year topped £1 billion largely due to a super-case which saw three men jailed for more than 12 years after police and customs officials smashed a tobacco smuggling gang. More than 40 luxury hideaways across Europe were raided where investigators discovered gold bars, diamonds, and jewellery - together with suitcases and supermarket shopping bags overflowing with cash. They were part of an international organised crime gang involved in cigarette trafficking, drug smuggling and money laundering.

“Over the last few years we have started to see a rise in the number of super-cases appearing in UK Courts worth substantial amounts of money. These are often run by well organised professional criminal gangs focused on making very large profits. Getting the large, often cross-border and complex frauds to court is both time-consuming and resource intensive. This places much more emphasis on businesses and consumers to protect themselves from a growing number of fraudsters who will take advantage given the opportunity.”

Roy Waligora, KPMG UK Head of Investigations

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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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