Fraud volumes dropped significantly as many court operations close due to COVID-19

COVID-19 measures led to the closure of many court operations and diversions of cases therefore impacting the volume of cases heard by the Courts.

Only 76 cases of alleged fraud were heard in Courts across the country in the first half of 2020 down from 217 cases prosecuted during the same period last year. This 65 percent decrease reflects the significant impact of the COVID-19 crisis on law enforcement. Almost £460 million of alleged fraud hit UK Courts in the first half of 2020, up by nearly 44 percent compared to the same period last year. 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; from £319 million in 2019 to £260 million in 2020. 

Work from home risks

The Fraud Barometer also recorded a number of cases which highlight the elevated risks associated with tech-enabled fraud and remote working. In one case, a Head of Finance, stole almost £3 million from his employer by setting up two fake payments to himself by substituting his own bank details in place of those of HMRC. 

Fewer court appearances indicate a calm before the storm

No one is under the illusion that actual fraud has decreased, and given the Government’s Coronavirus Job Retention Scheme is due to remain accessible to the public until October, it is likely that more fraud cases will emerge as the scheme unwinds. This is evidenced by the HM Revenue & Customs (HMRC) first arrest in relation to furlough fraud in July 2020. It is understood that in May, the HMRC had received up to 1,900 reports of alleged furlough fraud claims which are due to be examined in the coming months. The pressure on Courts is also likely to increase demand for alternative dispute resolution options such as arbitration.

While we get to grips with the ‘new normal’, we are likely to see a lot more HMRC activity where government aid schemes have been abused. This will place an additional burden on organisations to ensure that their programmes complied with the rules. We must also keep in mind that fraud data dropped drastically because court appearances were down as authorities struggled to keep pace during the crisis. Although the numbers indicate less activity, fraud has not gone anywhere, and as the UK establishes more special Courts to address backlogs, we are likely to see an increase in number of COVID-19 related fraud cases.

Roy Waligora, KPMG UK Head of Investigations

Roy Waligora

Partner, Head of Investigations and Corporates Forensic

KPMG in the UK