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Fraud Barometer: Regional highlights

Fraud Barometer: Regional highlights

The story across the UK regions.

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Roy Waligora

Partner, Head of Investigations and Corporates Forensics

KPMG in the UK

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Fraud Barometer January 2019: UK regions - Calton hill

August 2020 results

Our latest results from the KPMG Fraud Barometer have just been published covering January to June 2020. The Fraud Barometer has been tracking fraud trends since the 1980s and analysis of cases has continually identified trends in the types of fraud that have dominated courts. The bi‐annual Barometer identifies the latest fraud trends and patterns affecting the UK economy which helps businesses remain alert to new threats and respond to any fraud risks in an appropriate and proactive manner.

Scotland

  • Scotland sees complete halt in prosecution of fraud cases during H1 2020.

The closure of courts due to lockdown led to a halt in prosecution of high value cases in Scotland during the first half of 2020. For the first time in the history of KPMG’s Fraud Barometer, zero cases were registered between 1 January and 30 June in Scotland, compared to 4 cases totalling £1.2 million during the same period last year.

The finding has prompted a warning that Scotland’s courts could witness a ‘tsunami of fraud cases’ over the next year as courts face a backlog of cases and a potential new wave of fraud driven by the Covid-19 pandemic.

“With many of Scotland’s courts closed temporarily during the pandemic, it’s reasonable to assume the true extent of fraud committed across the country has been masked – not least as previous crises tell us that increased financial pressures on individuals can often drive increased criminal behaviour. Looking ahead, we certainly expect the fallout from the uncertainty caused by the pandemic to dramatically accelerate the levels of fraud hitting businesses, government and individuals.  It is therefore absolutely vital that businesses and consumers remain vigilant as Scotland enters what is likely to be a very challenging economic climate which will only drive fraudsters to take full advantage.”

Annette Barker, Head of Forensic Regions

 

North East:

  • North East region sees significant fall in volumes and value of fraud during H1 2020.

There was a dramatic drop in the volume and value of fraud cases coming to courts in the North East during the first half of 2020, as measures introduced in response to the COVID‐19 pandemic led to the closure of many court operations and diversion of cases.

Only four cases with a combined value of £566,870 were heard in the North East’s courts between 1 January and 30 June 2020, compared to 11 cases totalling £8.4 million during the same period last year.

“With many of our regional courts closed temporarily during the pandemic, it is perhaps reasonable to assume the true extent of fraud committed across the region has been somewhat masked – not least as previous crises tell us that increased financial pressures on individuals can often drive increased criminal behaviour. Looking ahead, we expect the fallout from the uncertainty caused by the pandemic to dramatically accelerate the levels of fraud hitting businesses, government and individuals. It is therefore vital that businesses and consumers remain vigilant as the region’s organisations enter what is likely to be a very challenging economic climate which will only drive fraudsters to take full advantage.”

Sara Smith, Forensic Director at KPMG in the North East.

 

Yorkshire:

  • Yorkshire region sees significant fall in volumes and value of fraud during H1 2020.

There was a dramatic drop in the volume and value of fraud cases coming to Yorkshire’s courts during the first half of 2020, as measures introduced in response to the COVID-19 pandemic led to the closure of many court operations and diversion of cases. only two cases with a combined value of £887,550 were heard at Yorkshire’s courts between 1 January and 30 June 2020, compared to 14 cases totalling £9.7 million during the same period last year.

“With many of our regional courts closed temporarily during the pandemic, it is perhaps reasonable to assume the true extent of fraud committed across the region has been somewhat masked – not least as previous crises tell us that increased financial pressures on individuals can often drive increased criminal behaviour. Looking ahead, we expect the fallout from the uncertainty caused by the pandemic to dramatically accelerate the levels of fraud hitting businesses, government and individuals. It is therefore absolutely vital that businesses and consumers remain vigilant as the region’s organisations enter what is likely to be a very challenging economic climate which will only drive fraudsters to take full advantage.”

Annette Barker, Head of Forensic Regions.

 

North West:

  • North West region sees significant fall in volumes and value of fraud during H1 2020.

The North West region saw a marked decrease in the volume and value of fraud cases coming to court during the first half of 2020, as measures introduced in response to the COVID‐19 pandemic led to the closure of many court operations and diversion of cases. Only 12 cases with a combined value of £5.2 million were heard at courts across the North West between 1 January and 30 June, compared to 26 cases totalling £29.2 million during the same period last year.

“With many of our regional courts closed temporarily during the pandemic, it is perhaps reasonable to assume the true extent of fraud committed across the region has been somewhat masked – not least as previous crises tell us that increased financial pressures on individuals can often drive increased criminal behaviour. Looking ahead, we certainly expect the fallout from the uncertainty caused by the pandemic to dramatically accelerate the levels of fraud hitting businesses, government and individuals. It is therefore absolutely vital that businesses and consumers remain vigilant as the UK enters what is likely to be a very challenging economic climate which will only drive fraudsters to take full advantage.”

Damien Margetson, Head of Forensic at KPMG in the North West.

 

Midlands:

  • Fraud in the Midlands drops by over 80%.

Almost £9.7 million of alleged fraud hit courts in the Midlands in the first half of 2020, down by 86% when compared to the same period last year. Only 8 cases were heard in courts across the region in 2020, before the country went into lockdown, with a decrease of 81% on the same time last year.

Commercial businesses and financial institutions were the most common targets in these fraud cases, with employees and professional criminals most likely to be the perpetrators. Unlike in previous years, only one of the cases heard by Midlands courts in 2020 involved a female perpetrator who set up two bogus companies to siphon off funds from the company she worked at. When looking at the regional splits, the East Midlands saw some fraud hotspots this year, surpassing the West Midlands in value, with the most being a £3million case committed by two men from Loughborough who tried to sell houses they didn’t own. Meanwhile over in the West Midlands, the highest value case was a £2million fraud committed by a group of ‘older’ men (over 50), who were selling black market alcohol.

“Our analysis shows a massive drop in both the number and value of fraud cases compared to this time last year, which is really interesting given the levels we saw in 2019. However, it’s worth bearing in mind that court closures and diversions, in response to the COVID‐19 pandemic, led to a delay of cases. Which means that the second half of the year will be one to watch as we expect to see a surge in fraud cases once court operations fully resume. With a challenging economic climate likely to have a negative impact on the pockets of many, it’s absolutely crucial, now more than ever, for businesses and consumers to keep a watchful eye on their assets and finances. Fraudulent activity typically increases whenever uncertainty or tough times occur, so ensuring protective measures are in place against any potential attacks is vital.”

Julie Bruce, Forensic Director at KPMG in the Midlands.

 

South West:

  • Number of fraud cases in the South West halves, but value per case increases.

The South West has seen the number of fraud cases taken to court fall by 50% compared to this time last year, while the value per case has increased. Five cases totalling £3.1m have been taken to courts in the South West so far this year, compared with ten cases totalling £3.3m this time last year. Two fraud cases this year have reached a total value of £1m each, while the average value (between £250 thousand‐£1million) was higher than compared to the same period in 2019.

Commercial businesses remain the most common target in these fraud cases, with professional criminals and employees most likely to be the perpetrators. One of the £1 million fraud cases involved members of the general public being duped into parting with their cash by professional criminals, highlighting the risk of fraud to the wider population. The region has typically seen ‘older’ criminals committing fraud, with 80% of cases carried out by people aged over 46, and with men and women appearing equally as likely to commit fraud.

“It’s concerning that there’s a growing trend for fraudsters to commit higher value crimes. However, the significant drop in fraud cases compared to this time last year, is likely to be down to a delay in cases reaching the courts amid the COVID‐19 pandemic. We expect to see a surge in fraud cases reaching courts in the second half of the year, and if the pattern so far is anything to go by, we could see a record year for high‐value fraud. It is absolutely vital that businesses and consumers remain on high alert for fraud as the UK enters what is likely to be a very challenging economic climate, which will encourage fraudsters to take advantage.”

Damian Byrne, Forensic Lead for KPMG in the South

 

Wales:

  • Fraud in Wales drops by three quarters.

Fraud in Wales has fallen by three quarters compared to this time last year. Only three cases totalling £1.6 million have been taken to courts in Wales so far this year, compared with 12 cases totalling £9.9 million for the same period last year. While all perpetrators have been men, there is no clear pattern to the type of person committing the crime, nor is there a ‘typical’ victim. This differs to the first half of 2019, when professional criminals in Wales were involved with more fraud cases seen by courts than any other perpetrator type.

“It’s interesting to see such a significant drop in fraud cases compared to this time last year. However, rather than being a sign that businesses and members of the public are taking more measures to prevent them from being victims to fraud, the drop is more likely to be down to a delay in cases reaching the courts amid the COVID‐19 pandemic. Consequently, we expect to see a surge in fraud cases reaching courts in the second half of the year. It is absolutely vital that businesses and consumers remain on high alert for fraud as the UK enters what is likely to be a very challenging economic climate, which will encourage fraudsters to take advantage.”

Damian Byrne, Forensic Lead for KPMG in the South.

 

East:

  • Value of alleged fraud hitting courts in the East of England exceeds £10 million.

The East of England has seen the number of fraud cases taken to court fall by three quarters compared to the same period in 2019. In value terms, fraud cases heard by the courts have fallen from £20 million in 2019 to £10 million for the first half of 2020.

This is in part due to the measures introduced in response to the COVID‐19 pandemic impacting how the courts operate and how quickly cases are heard. Alleged fraud carried out by professional criminals made up the bulk of the cases hitting courts across the region in the first half of this year, accounting for nearly all of £10 million of alleged fraud.

“Looking ahead we can expect the fallout from the uncertainty caused by the pandemic to dramatically accelerate the levels of fraud hitting businesses, the government and individuals. It is absolutely vital that businesses and consumers remain on high alert for fraud as the UK enters what is likely to be a very challenging economic climate which will only drive fraudsters to take full advantage.”

Kathryn Wasteney, Forensic Senior Manager for KPMG in the Midlands and East Anglia

 

South East and London:

  • Value of alleged fraud in London and South East nearly triples in first half of 2020 to £428 million.

The value of alleged fraud hitting courts in London and the South East during the first six months of the year has nearly tripled compared to the same period in 2019.

More than £428 million of alleged fraud hit Courts across the region, despite the number of cases falling by half. Just 36 cases in the region reached court before the country went into lockdown, compared to 82 in the same period last year.

Commercial businesses were the biggest victims of alleged fraud by value in the first half of the year, totalling over £220 million, up from £73 million in the first half of 2019. Professional criminals were the main perpetrators accounting for over £337 million of the alleged fraud in courts across the region during the first half of the year.

“Before the COVID‐19 lockdown the value of alleged fraud appearing in our courts was running at a very high level. Looking ahead we can expect the fallout from the pandemic to increase the levels of fraud hitting businesses, the government and individuals. It is absolutely vital that businesses and consumers remain on high alert for fraud as the UK enters what is likely to be a very challenging economic climate, which will encourage fraudsters to take advantage.

Damian Byrne, Forensic Lead for KPMG in the South.

© 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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