PracticeConsultingBanks top of ‘fraud league’

Banks top of 'fraud league'

Survey 'only shows tip of iceberg' but incidents have dropped off. Phillip Inman reports

Banks and other financial services companies topped the league of. fraud victims last year after they recorded 18 cases of fraud worth over #100,000.

But the figure, obtained as part of KPMG’s annual fraud report, revealed a sharp drop in the value of banking fraud cases from #39m in 1996 to #13m last year.

Investors became the most lucrative target for fraudsters who succeeded in swindling them out of #73m in just eight cases.

The massive rise in investor frauds pushed the overall cost of fraud to #120m, up from #95m in 1996.

Adam Bates, a fraud investigation partner at KPMG, said there had been a drop in reported fraud overall, continuing a trend since 1995 when the survey recorded that fraud cost UK business #1.2bn.

‘We saw bigger fraud totals in the early 1990s partly because in the recession there were the big corporate collapses – the Polly Peck’s, the Maxwell’s – and partly because now we have a pretty buoyant economy.’

Yet the figures are likely to have underestimated the extent of fraud. Few banks have reported cases of fraud unless the problem became public knowledge.

‘We are only seeing the tip of the iceberg. Much of the work we do is never reported to the police or finds its way to the press. We know there is more fraud going on than is recorded in our survey,’ added Bates.

The same is almost certainly the case for the recently released fraud figures from the EU Commission.

Almost #1bn was illegally siphoned off from EU funds last year. The 5,162 cases of fraud was a slight increase on the previous year, which Anti-Fraud Commissioner Anita Gradin said was due to the greater efforts of her staff in detecting fraud.

But the figure was considerably less than the #2.8bn the EU Court of Auditors, the EU’s financial watch-dog, said had gone astray last year through fraud, financial errors and accounting irregularities.

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