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UK fraud hit a 12-year high in 2007, according to a report by KPMG. Over £1bn worth of fraud came to court during the year – the highest since 1995.
With fears that the credit crunch will lead to a period of protracted economic slowdown, there is the potential that personal and corporate pressures may fuel fraudulent behaviour making the situation worse in 2008 rather than better, KPMG Forensic warns.
Hitesh Patel, partner at KPMG Forensic, said: “Levels of fraud continue to remain disturbingly high. Organised gangs have been more active than ever, with a proliferation in VAT frauds, ID thefts and other forms of white collar crime, to the tune of a huge £889m or nearly 90 percent of fraud by value. The sophistication of organised fraud in the UK is certainly extremely concerning. More fraud cases have been coming to court in recent years than previously, but one fears that this is just the tip of the iceberg.”
Organised criminals accounted for nearly 90 percent of fraud by value in 2007 (£889m), with the Government agencies having been the primary target (£833m). This represents an enormous jump from 2006, when professional gangs accounted for £221m of fraud.
Gangs have also aggressively exploited ID theft to perpetrate scams, making false benefit or tax credit claims. One husband and wife team claimed benefits for no fewer than eight adults and forty six children at a one bed flat in London, defrauding the public purse of over £1.1m. Other gangs targeted the transport system, organising large scale frauds on fake bus and tube passes.
Whereas the Government suffered heavily in 2007, financial institutions and other corporates enjoyed a fall in the value of frauds against them. £37m of fraud against banks came to court in 2007, substantially down from over £140m in 2006, while commercial business suffered £24m of fraud compared to £81m a year earlier. Nevertheless, particularly in the current economic climate, corporates need to remain extremely vigilant to the fraud threat.
Hitesh Patel concluded: “Given the developing economic conditions, companies and individuals need to be more alert than ever to the fraud threat.”
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