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The enemy within

The enemy within

Insider fraud more than doubled in 2019 to £46 million.

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Roy Waligora

Partner, Head of Investigations and Corporates Forensics

KPMG in the UK

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There were 102 cases of alleged insider fraud recorded for 2019 with fraud by management and embezzlement both up.

There was also a six-fold increase in the number of alleged procurement frauds appearing in court, usually involving fake invoices. Six cases worth over £16 million appeared in court in 2019 compared to £2.9million in 2018.

Management and employees represented 43% of perpetrators by volume in 2019 compared to 39% in 2018.  

Government and commercial businesses remain the main victims by volume of fraud, followed by the general public. Except for commercial businesses, there was a decrease in 2019 of the volume of fraud cases. This included Financial Services where the number and value of fraud attacks fell from 58 cases worth £74 million in 2018 to 38 cases worth £28 million in 2019. Evasion of duty ranked the largest fraud type by value, registering at £655 million in 2019. Embezzlement ranked the largest fraud type by volume, registering 74 cases (20% of the total) in 2019.

“Procurement fraud is a key area that businesses need to have robust controls around. Our experience shows that third party due diligence as part of a rigorous procurement controls environment can help organisations effectively manage their risk. Without such due diligence and basic controls such as segregation of duties, the repercussions for a business, particularly smaller businesses, can be devastating. 

With the economic road ahead still looking uncertain for UK businesses, many may respond by changing processes, initiating new projects and working with new suppliers, this presents a perfect ecosystem for fraud within which fraudsters will conceal, mislead and misrepresent as they exploit people’s vulnerabilities and confusion about the future. Businesses need to maintain robust fraud controls and remain vigilant and thorough during the continued uncertainty. These include having effective whistle-blowing channels.”

Roy Waligora, KPMG UK Head of Investigations.

© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

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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