KPMG confirms 'Extraordinary Year' For Fraudsters In The UK

                                     

The cost of fraud in Britain topped a record £3.5bn in 2011 in what has been described as an "extraordinary year" for conmen.

Accounting firm KPMG's annual Fraud Barometer recorded £2.5bn worth of fraudulent activity in the second half of the year, the most ever in a six-month period.

Five of the cases listed in the report involve amounts of more than £50m each.

Sadly, due to the current economic circumstances the forecast is that the situation will get worse before it gets better.

Hitesh Patel, KPMG

Hitesh Patel, KPMG Forensic Partner said: "2011 was an extraordinary year for fraudsters - as demonstrated by the record losses through large-scale cases of fraud which dominated the headlines."

He said the reasons were twofold: "Companies and government agencies have rooted out more fraud through implementing austerity measures and operational changes.

"At the same time the pressures on individuals as a result of the downturn continues to act as a catalyst for more fraud being perpetrated. "

Public sector and financial institutions were worst hit with 68 fraud cases - the highest ever number - costing more than £1bn.

Businesses are urged to beef up their security and remain vigilant

The KPMG report shows that professional criminals were largely to blame, but in some cases management insiders and customers were also responsible.

Despite improved security by the major banks, as customers move to online and mobile platforms to manage their accounts, the pressure on the industry is mounting to beat fraudulent activities.

With the authorities closing in, fraudsters have had to find more inventive ways to swindle those looking for investments.

KPMG recorded one scam in a fine wine and whisky investment scheme worth £30m, which turned out to be a "Ponzi" type-fraud offering investors returns of 110% over three months.

Mr Patel concluded: "Sadly due to the current economic circumstances the forecast is that the situation will get worse before it gets better.

"It is important that organisations do not become myopic on this point and ensure they have robust prevention and detection mechanisms."