KPMG’s Fraud Barometer noted cases of embezzlement, fraudulent trading, tax, loan and mortgage, benefit fraud and account takeover topped the list.
The volume of embezzlement cases during this time overshadowed those committing fraudulent trading, misselling and misrepresentation by 150 percent. Fraudsters were stealing from company, client and bank customer accounts as well as charitable funds and committing cash theft.
In one case, a woman claimed she had no idea that her husband stole almost £1.5 million from his employers over a period of approximately six years. The man used bogus invoices from fake companies to transfer thousands of pounds into his wife’s bank accounts.
Fraudulent evasion of duty, which is expected to boom in the near future, saw a significant drop compared to previous years in case numbers.
The industry most impacted according to the data was commercial businesses which saw a drop of 80 percent in value and 72 percent drop in volume, from 63 cases valued at £137 million last year, to 18 cases valuing approximately £27 million in 2020 (excluding the one case on film piracy*).
Government saw 65 cases worth almost £55 million in 2019 drop to only 19 cases with a value that ballooned 42 percent to £78 million in 2020. Tax and benefit fraud accounted for 13 of the 19 cases in 2020 with criminals stealing from the public purse to the tune of £21 million.
Financial institutions, which recorded 19 cases at a value of almost £19 million in 2019, this year saw 11 cases valued at over £82 million; representing a 331 percent increase in value. The main increase was due to one supercase currently being tried at the High Court in London involving a loan scheme fraud for £72 million which centred on the sale of mortgaged tankers for scrap.
In addition to the COVID-19 pandemic, Brexit returns as a high risk for businesses to urgently address their supply chains. They pose an inherent fraud risk as the transition from lockdown to the new reality may cause existing controls to be overridden.
* One film piracy case, which if successful would have cost the industry an estimated £200 million, nearly doubled the value of fraud committed to July 2020. By excluding this outlier, the data demonstrates a significant decrease in the value of fraud cases compared to last year.
The COVID-19 environment has led to increased financial pressures on individuals and organisations leading to more opportunities to commit fraud. This is likely to lead to further risk of financial misreporting and of misconduct and fraud in traditional hot spots such as procurement and supply chain. Given the elevated pressure on the Courts, business leaders should assess fraud risks and remind employees of anti-fraud policies and whistle-blowing channels in order to reduce the risk of loss.