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Fraud record as courts consider £900m losses in first half

KPMG's Fraud Barometer of court cases dealing with alleged losses of £100,000 or more, recorded 252 cases worth up to £895 million in the first half

Fraud record as courts consider £900m losses in first half

A record number of fraud cases reached UK courts in the first half of 2018, KPMG has found, with 252 cases under consideration.

The firm’s Fraud Barometer, which tallies trials dealing with alleged losses of £100,000 or more, said up to £895 million had allegedly been defrauded in cases being heard during the period.

The number of legal actions was 25% higher than any other six month period, and only seven fewer than recorded for the whole of 2017.

Losses valuing a record high of £3.6 billion were heard before UK courts last year.

James Maycock, forensic director at KPMG, said technology and cross-border activity, alongside increasingly professionalised organised gangs, have changed the nature of the crime.

Criminal groups were involved in 90 – roughly 36% – of all cases in the first half of the year, responsible for an alleged £200 million in fraud.

In one £3 million case, criminals sold thousands of card skimmers around the globe, with the leader of the gang operating as a director of a company registered in the UK.

‘We can expect this year to be another 12 months of large numbers of fraud cases coming to court,’ said Maycock.

‘The main victims have been governments through attacks on the tax system, banks through loans and mortgages obtained via deception, and investors enticed by the promise of tantalising returns.’

The wide availability of hacking tools, spam generators, malware distributors, and bots on the dark web has made it cheaper and easier for criminals to get what they want.

‘With technology evolving at such a ferocious rate it is likely to be shaped by the intrinsic value of data that these technologies can manipulate - and how it is protected – and everyone’s data is at risk,’ Maycock added.

By value, four fifths of cases had an international element, with the largest involving alleged fraud at multi-national organisations, requiring the cooperation of law enforcement agencies of several countries.

‘Strong working relationships across borders are required for domestic law enforcement to collate effectively the necessary evidence to prosecute fraudsters, said Maycock.

‘Similarly, commercial businesses need a globally minded and co-ordinated response to fraud to help ensure they are protected from increasingly global threats.’

Brexit is viewed as potentially creating more avenues for fraudsters to exploit, as new customs arrangements are put to the test.

Evasion of customs duties – particularly on smuggled tobacco, counterfeit pharmaceuticals, and pirated media – already amounted to £100 million in the first half of this year, while carousel frauds exploiting multi-jurisdictional tax laws have cost the tax man up to £30 billion over the last three decades.

Maycock concluded: ‘New systems and new landscapes, such as new tax and customs arrangements, have in the past opened lucrative loop holes ripe for the picking from unscrupulous criminal gangs and businesses looking to improperly cut their costs.’ 

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