78% hike in fraud cases hitting courts

The number of fraud cases reaching courts in the UK rose by 78% in 2018 according to research by KPMG Forensic, which identified 453 cases with a total value of £1.2bn in its annual survey, and warns untested customs and tax arrangements post-Brexit could see levels rise further

KPMG’s fraud barometer, which records cases of alleged fraud with a value of more than £100,000 includes one supercase (a case greater than £50m), and a large volume of smaller value cases between £10m and £50m covering areas such as evasion of duty, VAT fraud, investment fraud, loans and mortgages, counterfeit goods, pensions and social benefits.

The firm says sophisticated technology and social engineering have become closer to the norm for ‘professional’ criminals, as evidenced by the fact that the number of cases of ‘account takeover’ frauds identified in the survey has more than doubled from 13 cases to 34, with diversion fraud, identity theft and push-payment fraud being the most common methods.

James Maycock, forensic partner at KPMG, said: ‘In the round, fraud was a diversified portfolio this year. Fraud levels in the UK continue to rise as criminals look for new ways to exploit both public sector and private sector fraud opportunities.’ 

There was a surge in the value of insurance frauds hitting courts in the last 12 months, more than was seen in the period 2014 - 2017 combined. Overall, £17m of alleged insurance fraud appeared in 19 cases, compared to 24 cases with a combined values of £11.9m in the years 2014 - 2017. Cash for crash, personal injury scams and faked death claims featured multiple times.

In another emerging trend, 2018 saw a large increase in the value of fraud cases coming to courts involving rogue tradesmen, which have usually involved amounts below the £100,000 threshold. However in 2018 there were 18 cases with a value of £7m.

Around £89m of duty evasion was recorded in the fraud barometer for 2018, the highest value recorded, with the number of fraud cases relating to tobacco products more than doubling in 2018 from 16 to 41.

Cross-border smuggling was also one of the largest fraud types coming to court - the most common goods were counterfeit pharmaceuticals and pirated digital media.

KPMG’s analysis points out that missing trader intra-community (MTIC) or ‘carousel’ frauds have been one of the biggest drivers of fraud recorded in the three decades of it has been collating statistics, and have cost the UK public finances an estimated £25bn-30bn over that period. The firm warns that with new customs arrangements potentially coming into play post-Brexit, there is the potential for professional criminals and misguided businesses to exploit or abuse untested technology or tax collection mechanisms.

Maycock said: ‘How Brexit will impact fraud levels is yet to be seen, but new systems and new landscapes, such as new tax and customs arrangements, have in the past opened new and lucrative loop holes ripe for the picking from unscrupulous criminal gangs and businesses looking improperly to cut their costs.’

KPMG Fraud Barometer 2018 is here

Report by Pat Sweet

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