KPMG survey reveals surge in number and value of frauds

Surge in number and value of frauds: KPMG survey

KPMG’s latest six-monthly Fraud Barometer shows a large rise in the value of frauds being committed in Australia.

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For the period September 2015 to March 2016, 116 frauds occurred, with a value of $381.1 million – an average value per fraud of $3.3 million.

This compares with 91 frauds with a value of $128.4 million, at an average value per fraud of $1.4 million, for the previous 6-month period.

Gary Gill, Head of Forensic at KPMG Australia, said: “This edition of the Fraud Barometer coincides with the release of KPMG’s Global report Profiles of the Fraudster. This enables us to compare how Australian frauds compare with international experience – and, interestingly, Australian fraudsters tend to be younger and more gender-diverse than overseas.”

Key findings include the following:

  • The most common perpetrators are business ‘insiders’, with frauds attributable to management averaging $5.7m – over double that of non-management employees.
  • Gender diversity among fraudsters is changing – the proportion of frauds committed by women in Australia have increased by 26 percent. Male fraudsters are responsible for 61 percent of the offences, with women now committing 39 percent of the nefarious activity. 
  • Internationally, the proportion of frauds committed by women identified globally was just 17 percent. Interestingly, male fraudsters were found to collude more than their female counterparts, both locally and globally.
  • Over a quarter of the fraudsters were aged below 36 years, which is almost double the proportion identified globally.
  • Investors and government agencies are more susceptible to being fleeced by fraudsters than any other category of victims. Government and investors together were the victims of more than $301m of these frauds. 
  • The value of frauds against government agencies has increased by almost four times and over six times for investors.
  • Queensland and NSW top the fraud charts at $195 million and $124 million, respectively. A number of the significant investor frauds occurred in Queensland.
  • Maintaining extravagant lifestyles and gambling were key drivers of frauds, regardless of gender.
  • Most frauds relate to misappropriation of assets, embezzlement and abuse of position.
  • Locally and globally, whistle-blowers are becoming an increasingly important in detecting fraud, particularly where the fraud involves collusion.
  • 26 percent of frauds used technology to enable the fraud in the latest Barometer results, including spoofed emails and online identity theft. This compares with 24 percent of fraudsters using technology on a global level. 

Gary Gill added:

“Cyber-crime continues to rise. We are seeing an alarming increase in the number of spoofed emails, which are often addressed to senior finance personnel, purportedly from someone in the C suite, with instructions to transfer large sums of money into bank accounts.”

“We are finding that clients under-estimate the threat from the malicious insider when it comes to cyber-crime, and as a result they are not paying sufficient attention to the basics. Identity and access control is often weak, and organisations often don’t understand where their critical IP assets are located and who in the organisation has access to them.”

Some of the larger and more interesting Australian frauds, all of which involved male perpetrators, include:

  • A $68 million tax evasion scam by an emerging technologies business in Queensland.
  • A $65 million fraudulent investment scheme involving over 11,000 investors in Queensland.
  • A $60 million embezzlement scheme involving a financial advisor in NSW.
  • A $33 million tax evasion scam by a stockbroker turned property developer in NSW.
  • A $23 million sports betting scam in Queensland.

Further information

Ian Welch
Senior Communications Manager, KPMG
T: 02 9335 7765 / 0400 818 891
E: iwelch@kpmg.com.au

Fraud Barometer: October 2015 – March 2016

KPMG’s 6-monthly Fraud Barometer shows a large rise in the value of frauds being committed in Australia.

 
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