Fraud cases rise, but overall value falls, latest North West figures show

The number of fraud cases prosecuted in the North West in the first half of the year increased on last year’s level, but the value fell, new figures from the KPMG Fraud Barometer reveal.

During the six month period North West courts heard 17 cases of fraud, compared with 13 in the same period last year.

But the overall value of cases exceeding £100,000 fell from £23.1m last year to £18.1m in 2022.

The barometer showed that embezzlement, which includes theft from company or client accounts, was the most common type of fraud in the region and accounted for the largest share in fraud value (41%).

Damien Margetson, head of forensic at KPMG in the North West, said: “The wave of corporate fraud is continuing to sweep through the region, with rogue employees abusing their positions of trust to steal money from their employers, clients and other partners.

“The latest slew of cases to hit the courts shows how the failure by some businesses to maintain adequate controls can lead to serious fraud being committed.

“North West businesses need to take urgent action to make sure they have safeguards in place that can detect and prevent these crimes.”

He added: “The Government is stepping up its attention on fraud and business leaders in the region need to follow suit.

“The new Public Sector Fraud Authority will target criminal gangs who rip off the taxpayer, while the Department for Business, Energy and Industrial Strategy response on corporate governance and audit reform outlined new responsibilities for directors in terms of making public their efforts to prevent and detect fraud in their organisations. This is a significant sea-change that will see businesses, and individuals, taking on more responsibility for tackling fraud.”

Among the case studies to reach the region’s courts during this period were the cases of a 38-year-old paralegal, jailed by Manchester Crown Court for stealing £438,000 from his employer by directing payments for innocent victims of road crashes into his bank account to feed his gambling addiction. Also, a mum-of-two was jailed by Liverpool Crown Court for steeling £256,000 from her employer to fund a lavish lifestyle while managing some of the banking functions for an insurance broker, and a man was sentenced to six years in prison by Bolton Crown Court for fraud after stealing millions of pounds from a family business where he worked as an accountant.

Nationally, the general public continues to bear the brunt of fraud.

In June this year, UK Finance said that the UK is experiencing an “epidemic of fraud” and the latest Fraud Barometer figures support this assessment. In the first half of 2022, the public was the group scammed the most by volume with 47 cases reaching the UK Crown Courts. Furthermore, the value of fraud allegedly carried out on the general public went up by 74% – from £43.1m in the first half of 2021 to £75m during this year’s first half.

For the first six months of 2022, financial institutions had the most fraud cases reach UK Crown Courts by value, at a total worth of £305.2m for nine cases, a vast jump of 4,333%, up from £6.9m for 13 cases during the first half of 2021.

In the context of a changing global banking landscape, where branch networks are shrinking, volumes of digital payments are increasing and payments are being processed in seconds, the data illustrates that fraudsters are creatively finding new ways to steal more from financial institutions and their customers.

Money laundering cases were by far the most significant type of fraud in terms of value, at £297.6m for seven cases in the first half of 2022, rising 16,781% from £1.8m for five cases in the first six months of 2021.

This was largely due to a single high value case of £266m, where money was laundered through a company bank account and the proceeds used to purchase gold over a period of two years.

Triggered by Russia’s invasion of Ukraine, the newly passed Economic Crime Act and a second Economic Crime Bill that is expected in the coming months, contain measures designed to increase transparency and give law enforcement enhanced powers to combat money laundering.

They also provide law enforcement with enhanced anti-money laundering powers to encourage businesses to share information on suspected economic crime. As a result of this legislation, in the short term there is likely to be an uptick in this kind of fraud reaching UK Crown Courts as more of this type of crime is identified.