KPMG’s bi-annual Fraud Barometer has shown a high volume of fraud cases prosecuted in the past year, but at much lower value levels than recorded in previous years (the average case value this year being £2.9 million compared with £6.1 million over the last five years).
The report also shows that, while fraudsters are at the cutting edge of technology – attacking banks in the virtual world, for example – some have reverted to ‘paper and pen’ as organisations focus their security efforts on technology-driven defences.
Hitesh Patel, UK Forensic Partner at KPMG, commented: “It’s certainly the case that we have seen fraudsters using very clever high tech frauds to attack banks, businesses and local authorities, but we’ve also seen some of the biggest frauds in more low tech scams. As old forms of transactions, such as cheques, are phased out, so organisations are focusing on developing sophisticated lines of defence. Yet, rather than putting criminals off, many fraudsters are ignoring the challenge of triumphing over technology in favour of using simpler methods of deception.”
‘Old-fashioned’ habits die hard
The data shows that con artists still rely on ‘old technology’ to perpetrate fraud, with a number of schemes in 2013 based on counterfeit cheques.
In one strikingly simple case a local Government employee processed cheques for legitimate payees using disappearing ink. She secured the signatures of senior management for cheques reaching a total value of £162,000 and waited for the ‘payee’ details to disappear before substituting them with her own name.
In a case worth £20 million a businessman paid a series of worthless company cheques into an account based in the UK. He – and the gang involved – succeeded in transferring three-quarters of the funds into a foreign account before suspicions were raised and the account was frozen.
Another case involved a conman who attempted to buy £1 million of cars by visiting dealerships on six occasions, paying by cheque for an Aston Martin, Maserati, Ferraris and a Bentley. The man was caught when the cheques bounced and one of the dealerships visited his home to reclaim the vehicles.
Fraudsters’ determination to focus on the so-called ‘old-fashioned’ scams and avoid elaborate methods of deception is also evident through a resurgence of cases involving tax rebates, loans and mis-selling.
Combined, these three forms of fraud totalled more than £343 million – up from £41 million in the previous 12 months. This trend shows that, although the motivation to deceive comes in a variety of forms, many criminals are still prepared to rely on the traditional conman artistry of making financial gain through misplaced trust, attacking people’s vulnerabilities and sensibilities.
Virtual world becoming a home to fraudsters
Meanwhile, there were cases where banks and businesses were attacked online, with fraudsters using computers, turning to robotics and malware in an attempt to avoid detection.
One example involved eight people arrested in connection with a £1.3 million theft by a gang who took control of a bank’s branch computer system. They had placed a ‘keyboard video mouse’ and 3G router on one of the computers inside the branch when one of the fraudsters posed as an engineer, saying he was there to fix computers.
The ‘fix’ enabled the gang to control computers remotely using code and surveillance to find holes in organisational cyber defences and transfer money into different bank accounts.
In another case, fraudsters posted fake adverts for work at Harrods on a website as part of a £1 million scam to trick desperate job hunters out of their savings.
The con involved writing ‘Trojan’ malware which was hidden in job application pack downloads posted on the free website Gumtree. Once embedded on computers, the software copied bank log on and security details of those seeking work before forwarding them on to the criminals who netted in excess of £1 million.
Bribery and corruption on the radar
Despite organisations seeing a decline in internal cases of fraud, the latest KPMG Fraud Barometer highlights the first prosecutions under the UK’s Anti Bribery and Corruption legislation.
In a case adding £23 million to the total figure in this year’s Fraud Barometer and relating to the purchase of 6,000 hectares of land in Cambodia bought through senior military officials based in the country, three senior executives have been charged with making and accepting a financial advantage in breach of the Bribery Act.
As well as focusing on how they were able to purchase the land, the case examined whether the company missold bio-fuel investment products after the authorities were alerted to the possibility they were providing false information to clients.
“The pressure to compete lies at the heart of attempts to bribe and corrupt,” said Hitesh Patel, “and the old adage of every person having their price is now much more likely to trigger criminal repercussions.”
Continuing this theme, Patel concluded: “The UK has seen its first corporate prosecution under the new anti-bribery legislation. With it being widely known that other cases are in development, fraudsters may begin to fear the ramifications of being caught. If guilty verdicts are returned and heavy punitive measures imposed, perhaps we will start to see people thinking twice before attempting to corrupt others in the pursuit of unfair advantage.”