KPMG: “Fraudsters remain bullish despite efforts to curb criminality”

Fraud in the UK is perceived to be at unprecedented levels. According to the Home Office, fraud accounts for over 40% of crime, but receives less than 1% of police resource. As overall fraud levels continue to rise, the latest figures appear to show the challenges that Crown Courts face in prosecuting perpetrators of this form of criminality.

Commenting on the findings, Roy Waligora (partner and head of UK investigations at KPMG) said: “The timely prosecution of economic crime remains a challenge. In the context of rising fraud rates, it’s disappointing to see little change in the number of high-value fraud cases being heard in UK Crown Courts. Impending changes in the law intended to improve fraud prevention and reporting, including the ‘Failure to Prevent Fraud’ offence introduced in the Economic Crime and Corporate Transparency Act 2023, combined with investment in technologies such as generative Artificial Intelligence to improve fraud detection, could make it even harder for courts to keep up.”

Fraud in the public sector

The most common type of fraud by value during 2023 was Government-related fraud (at £592.7 million), accounting for over half of the total value of fraud seen last year. This was followed by commercial business (£164.6 million) and investors (£121.7 million).

Waligora added: “Fraud against the Government during the COVID-19 pandemic skyrocketed. Our latest data illustrates that prosecuting offenders of this crime is an ongoing issue. With the cross-party Public Accounts Committee highlighting the need for the Government to do more to recoup money lost to COVID-19 fraud, we expect to see this trend continue.”

Cost-of-living crisis spurs insider fraud

As the cost-of-living crisis continues, it’s inevitable that cases of individuals stealing from their employer will become more prevalent. In 2023, employees and management were involved in nearly half of all cases (43 and 58 cases respectively) to the combined value of £221.3 million.

The steep decline in job hiring activity covered in a recent KPMG report may well create pressure on individuals that could lead to increased levels of insider fraud.

On that note, Waligora observed: “We are likely only seeing the tip of the iceberg when it comes to fraud cases triggered by the cost-of-living crisis. Businesses should ensure they have appropriate safeguards in place to protect against any potentially fraudulent activity perpetrated from the inside.”

Professional criminals “unrelenting”

As with previous years, professional criminals were the biggest perpetrator type by volume (90 cases). Further, the general public continues to be taken advantage of by fraudsters. In 2023, 78 cases of fraud were perpetrated against a member of the public for a total value of just over £58.3 million, compared with 74 cases in 2022 totalling £137.4 million. Evidence also indicates that some individuals are becoming repeat victims of fraud.

The KPMG Fraud Barometer is the longest running study of its kind in the UK. It has been tracking fraud trends since 1980s, while its analysis of cases has continually identified trends in the types of fraud that have dominated the courts.