The latest results from the KPMG Fraud Barometer have just been published and cover January to June 2021. The Fraud Barometer has been tracking fraud trends since the 1980s and the analysis of cases has continually identified trends in the types of fraud that have dominated the UK 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.

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Scotland anchor

Scotland

  • High-value alleged fraud in Scotland reaches more than £2.5 million in the first half of the year.

“As COVID-19 restrictions begin to ease, we are seeing the reopening of the criminal justice system and in turn, an increase in cases of fraud coming before the courts. The Scottish Courts and Tribunals Service said in March that it could take until at least 2025 to clear the backlog of cases. To put that into context, the aggregate value of cases in Scotland was more than £15.6 million.

However, it has been an extremely challenging year and a half since the pandemic began. We expect an increase in fraud cases to continue as some people take advantage of the vulnerability of individuals and organisations for their own gain. Although it’s encouraging to see cases being brought before courts once again, we still have a long way to go to clear the backlog. While the Scottish courts continue the battle to keep up, we urge people to remain cautious and to be aware of the potential dangers of becoming a victim of fraud.”

Annette Barker, Head of Forensic.

North East anchor

North East

  • Fraud cases in North East courts in the first half of 2021 reached £3 million, an increase of 434%.
  • The general public were the main targets of fraudsters, accounting for 70% of the cases in the region, followed by government (20%) and commercial businesses (10%).

“Professional criminals, alongside opportunistic fraudsters, have seized the opportunity to take advantage of people, businesses and government during the pandemic, with the value of such activities making a significant increase. The public must try to remain aware of the latest scams and be extra vigilant. More can be definitely be done around awareness of tactics and areas of focus for these criminals to try to reduce the amount of these types of crimes.”

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

Yorkshire anchor

Yorkshire

  • Fraud cases in Yorkshire courts in the first half of 2021 had a value of £7.4 million, an increase of 738%.
  • The Government was the main target of fraudsters (50%).

“New government support mechanisms to get us through the challenges of the pandemic have opened a door for potential opportunistic fraudulent activity. The public must also try to remain aware of the latest scams and be cautious, but more can be done around raising awareness of tactics to try to reduce these types of crimes. Businesses need to put in place more robust measures and internal controls to protect themselves from internal and external fraud.”

Annette Barker, Head of Forensic for KPMG in Yorkshire.

North west anchor

North West

  • Fraud cases in North West courts in the first half of 2021 had a value of £23 million, an increase of 343% while volumes only saw an 8% increase.
  • Commercial businesses were the victim of the highest number of cases.
“The value of fraud cases in the North West has gone up despite only a minor increase in cases being heard, this demonstrates the types of fraud being committed in this period have become more serious with criminals taking higher risks for larger pay-outs.  Professional criminals, alongside more amateur fraudsters, have seized the opportunity to take advantage of people, businesses, and government during the lockdowns we have seen over the past year. Businesses need to put in place more robust measures and internal controls to protect themselves from internal and external fraud.”
 

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

Midlands anchor

Midlands

  • Volume of alleged fraud reaching Midlands courts increased over threefold with a combined value of £20 million.
  • The East Midlands courts saw the majority of the cases (£12.6 million in value), compared with the West Midlands (£7.6 million).
  • The Government (£6.3 million) and general public (£6.8 million) resulted in the highest value of losses.

“There’s no doubt in my mind that fraudsters have and will continue to take advantage of the COVID-19 pandemic and they are becoming increasingly more sophisticated in their attacks. It’s interesting that we’re seeing significantly more cases with high values in the East Midlands than the West, however this could be due to the hefty backlog of cases that the region’s courts are still battling to get through. With that in mind, what we’re seeing currently could be just the tip of the iceberg.

Typically, whenever there are periods of challenge and uncertainty, you do see a spike in fraudulent activity. Many of us now rely heavily on tech and devices, due to the shift in work and life over the last 15 months, so it’s vital for both individuals and organisations to remain vigilant and take the necessary steps to protect their data and cash from fraudsters.” 

Julie Bruce, Forensic Director for KPMG in the Midlands.

East anchor

East

  • Value of fraud cases fell in the East by 55% to £4.5 million, but the number of cases doubled.
  • Commercial businesses were the victim of 50% of the fraud cases.

“As with most areas of life, the COVID-19 pandemic has had a huge impact on the legal system in the region, and whilst the courts are working hard to address the backlog of cases, it will take some time for progress to be made. The regional data from the Fraud Barometer suggests that individuals, including employees and those in management positions, may be taking advantage of the opportunities created by the pandemic to commit fraud.  Our expectation is that as the economy continues to recover fraud risk will remain high so it is important that organisations and members of the public alike are vigilant to prevent falling victim to fraudsters.”

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

Wales anchor

Wales

  • Volume of fraud cases in Wales more than doubled in first half of the year, with the value increased to over £2 million.
  • Professional criminals continued to be the main class of perpetrator.
  • Government organisations (£716 thousand) and the general public (£581 thousand) were the most common victims of fraudsters.

“The decrease in fraud cases heard in the Welsh courts during 2020 was notably lower than historically observed due, at least in part, to the disruption caused by the COVID-19 pandemic. The increase in fraud cases during the six months to 30 June 2021 was therefore somewhat expected and may continue as there has been increase in opportunities and incentives, during the pandemic for example, through changes to working arrangements and temporary and permanent business closures, leading to a level of heightened fraud risk. Our research shows that government organisations, individuals and businesses continue to be of particular risk of fraud from professional criminals as well as, in some cases, their own employees. As the economy recovers we anticipate fraud risk will remain high so it is important that organisations and members of the public remain vigilant to prevent falling victim to fraudsters.

Damian Byrne, Forensic Lead for KPMG in the South.

South West anchor

South West

  • Number of the fraud cases in the South West  more than tripled and the value more than doubled in first half of 2021.
  • Professional criminals were the most common class of fraudster totalling almost £3.5 million.

“Last year’s dip in fraud cases heard in courts across the South West region was, at least in part, due to the disruption to the legal system caused by the COVID-19 pandemic. The increase in fraud cases thus far in 2021 may continue as fraud risk remains high due to the combination of financial and other factors arising from the pandemic that increases vulnerability and creates opportunities for fraudsters.  Our research shows that both individuals and businesses remain at risk of fraud, particularly from professional criminals. As the economic recovery continues we anticipate attempts at fraud will remain high so it is important that organisations and members of the public alike remain vigilant.”

Damian Byrne, Forensic Lead for KPMG in the South.

South East anchor

South East

  • The number and volume of fraud cases in the South East rose significantly in the first half of 2021 to £12 million.
  • Professional criminals were the main perpetrators of fraud in the region (£2.5 million).

“Our research shows that the profile of the region’s fraudsters is similar to previous years, with male professional criminals involved in most of the fraud cases. The number of fraud cases involving individuals in management roles over the period is an interesting development and something to watch as business aims to get back to normal in the next few months. The increase, in both value and volume terms, of fraud cases heard in the South East’s courts indicates that the backlog of cases arising from the disruption caused by the COVID-19 pandemic is in the process of being cleared down. Whilst it remains unclear whether the increase in cases will continue in the second half of 2021 the pandemic has created opportunities for fraudsters and exposed the vulnerabilities of potential victims, so fraud risk remains high. Therefore, it is important for individuals and organisations to remain alert for fraud.”   

Damian Byrne, Forensic Lead for KPMG in the South.

London anchor

London

  • Value of fraud in London fell by £368 million in first half of 2021 and the volume decreased to 26 cases.
  • Professional criminals were the main perpetrators of fraud (£42.3 million) or 77% by value.
  • Significant increases were seen in the number of fraudsters in either employee or management roles.

“Despite the fall in the volume of alleged fraud cases being heard in London courts, the region remains the fraud hotspot of the UK, with significantly more fraud by value than anywhere else in the country. The courts are in working through the backlog of cases in the system caused by the COVID-19 pandemic, but so far in 2021 we have not seen hardly any of the higher value fraud cases that we would usually expect to be heard in London courts, suggesting the more complex cases may have been postponed until a later date.

One case for £1.8 million took eight years to investigate. This demonstrates the challenge that authorities face around prosecuting economic crime. With hard crime increasing as well as economic crime resources will be under pressure.

 

Our research shows that individuals, government organisations, financial institutions and businesses remain targets of fraud, particularly from professional criminals. The Fraud Barometer appears to suggest that employees and individuals in management roles may be taking advantage of vulnerabilities exposed by the pandemic to commit fraud.  As the economy continues to recover from the pandemic we anticipate fraud risk to remain high so it is important that organisations and individuals keep alert to prevent becoming victims of fraud”.

Roy Waligora, Partner, Head of Investigations and Corporates Forensic, for KPMG in the UK.