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January 21, 2016updated 31 Aug 2016 9:49am

Fraudsters hit UK financial firms for £176m

News: KPMG analysis found that fraud in the UK reached over £732m last year.

By CBR Staff Writer

Fraud in the UK reached more than £732m in 2015, according to new analysis by KPMG.

KPMG’s Fraud Barometer, which measures fraud cases with losses of £100,000 or more reaching the UK courts, shows that the value of fraud prosecuted rose in 2015, up from £717m in 2014. The average value of fraud per case also increased to £2.4m in 2015 compared to £2m in 2014.

Fraudsters were found to mainly target victims in financial distress, with KPMG’s Fraud Barometer seeing a marked increase in fraudsters targeting individuals and families, stealing £156m. This reflects a 300% increase on 2014 when just £38.5m was lost by vulnerable victims.

Hitesh Patel, UK Forensic Partner at KPMG, said: "Criminals hiding behind a veil of respectability are preying on the poor, pushing people further into poverty. After appearing to offer victims a way to escape their debt, they have then proceeded to take what little the victims had left. With interest rate rises possible in 2016, such debt restructuring schemes are, sadly, likely to remain popular with fraudsters."

Fraudsters also targeted businesses and public organisations by falsifying their financial position to extract funds or attract funding investment, resulting in losses of £176m – a tenfold increase on 2014.

Criminals used tried and tested techniques, with some falsifying their finances to deceive victims and extract funds or entice funding investment. A failure to scrutinise prospective deals and third parties resulted in losses of £176m in 2015, a tenfold increase on 2014.

In one large case, fraudsters deployed this technique to target financial institutions, securing fraudulent loans totalling £142m. The perpetrators allegedly presented a falsified order book as an asset, against which the large loans could be secured. The customers did not in fact exist.

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KPMG forensic director in the London region Chris Wheeler said: "Fraudsters and criminal gangs see financial institutions as a series of processes that they need to overcome, but once penetrated the rewards can be bountiful.

"Whilst large organisations focus on regulatory efforts to combat financial crime at the front end, such as money laundering, the data shows vulnerability to old-fashioned back office fraud.  The importance of employee screening and pre-employment due diligence measures cannot be understated."


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