industry focus
Supply chain helps push UK Fraud up by 22 per cent
The value of fraud in the UK has risen by 22 per cent to £385 million, according to the latest figures from the respected KPMG Fraud Barometer.
The data also shows a very marked increase in so-called ‘middle man’ fraud, which has risen by over 242% to hit a value of £99 million as criminals immerse themselves within the supply chain.
However, it’s those in positions of responsibility and management who have driven the growth in fraud, accounting for over 68% of fraud by value in the first half of 2015 compared to only 22% last year.
The Fraud Barometer – which is designed to measure fraud cases with losses of £100,000 or more reaching the UK’s courts – also reveals an “explosion” of cases in which individuals, betraying the trust of those closest to them, have targeted their own relatives.
The Barometer reveals a substantial rise in supply chain fraud as criminals pass themselves or their products and services off as genuine.
Customers were often unaware that they had been tricked by an imposter or that they had bought counterfeit goods. This type of fraud accounted for £99 million in the first two quarters of 2015, duly representing an increase of £70 million on the same period last year.
In one case, the defendants are alleged to have set up fake Government websites to dupe people into handing over money for administrative services for which the end consumer did not in fact have to pay. The losses involved are thought to total £30 million.
“Criminals are immersing themselves into the supply chain,” explained Hitesh Patel, forensic partner at KPMG.
“Unwitting buyers often genuinely do not realise they are dealing with an intermediary when they do not need to as a result of misrepresentation. This issue has been aggravated by the sheer volume of transactions conducted online. Criminals are inherently adaptable and have seamlessly moved with the times, altering the way in which they target victims to take advantage of the myriad of advances in technology and anonymity afforded by digital commerce.”
There has also been a surge in white-collar crime, with those in a position of responsibility or management abusing their power to commit fraud totalling £262 million. The corresponding figure in 2014 was £72 million.
Patel adds: “These white collar fraudsters often shelter in the business’ inner sanctum and can quietly wreak substantial financial havoc before their actions are uncovered,” asserted Patel.
“In the majority of cases, the fraudsters’ motivation is simply one of greed as they seek to subsidise their high octane lifestyle at the expense of their employer or clients. These are often crimes of opportunity, made possible and tempting in the upper echelons of a business if blind faith and trust are a proxy for controls.”
