According to a new report by KPMG International, technology was found to be a significant enabler for a quarter (24 percent) of the 750 fraudsters investigated by forensic specialists across 78 countries. By contrast, the Global Profiles of the Fraudster report t reveals that proactive analytics plays an astonishingly minor role in combating fraud, with only 3 percent of the fraudsters being detected in this manner.
13 June 2016 - According to a new report by KPMG International, technology was found to be a significant enabler for a quarter (24 percent) of the 750 fraudsters investigated by forensic specialists across 78 countries. By contrast, the Global Profiles of the Fraudster report t reveals that proactive analytics plays an astonishingly minor role in combating fraud, with only 3 percent of the fraudsters being detected in this manner.
“The double-edged sword of technology in fraud is only going to get sharper,” said Phil Ostwalt, Global Head of Investigations, KPMG International. “As technology becomes more advanced, so too do the schemes to use it maliciously. And while it’s clear that fraudsters are all too comfortable making use of technology to perpetrate a fraud, we are seeing little evidence that companies are doing the same to prevent it. Threat-monitoring systems and data analytics are must-have’s for organizations on the look-out for anomalous or suspicious behavior.”
In Bahrain, government and private organizations are taking some steps to protect against fraud however as indicated in the report and in line with the rest of the world, these steps may not be enough. Jeyapriya Partiban, Partner and Head of Risk Consulting at KPMG in Bahrain stated that fraud and economic crimes are critical systemic risks that any business needs to be aware of.
“With technological disruption, these risks have compounded. However, organizations are increasingly becoming aware of the threats they face, and they are working proactively to prevent any fraud related incidents. It is also reassuring that the Government in Bahrain, through the General Directorate of Anti-Corruption Economic and Electronic Security, are working around the clock to help raise awareness in the market for stronger governance and controls to protect a business/individual against fraud. We can only protect organizations and individuals from this through strong legislation, robust governance and constantly evolving security protocols.” Jeyapriya added.
Tech-savvy fraudsters are using technology in a variety of ways to perpetrate frauds. In these instances where fraudsters are using technology, about 24 percent entailed the creation of false or misleading information in accounting records, 20 percent involved fraudsters providing false or misleading information via email or another messaging platform and 13 percent involved perpetrators abusing permissible access to computer systems.
The new face of fraud
Opportunistic Fraud a Growing Concern
Weak internal controls were a factor for 61 percent of fraudsters and the problem appears to be growing. The number of fraudsters who were able to commit their acts as a result of taking advantage of weak controls rose to 27 percent, from 18 percent in the 2013 report.
Even if controls are strong, fraudsters can and do evade them or override them. Colluders were able to circumvent strong controls in 16 percent of the cases and an additional 20 percent recklessly defrauded with no regard for the controls.
Other Key Findings
“Globalization and regulation are just a few of the megatrends for why controls are more important than ever in business today,” said Ostwalt.
To view additional information about the Study, please visit kpmg.com/fraudster. You can also follow the conversation @KPMG on Twitter.
About the survey
Data was gathered from fraud investigations conducted by KPMG member firms’ forensic specialists in Europe, Middle East and Africa (EMA), the Americas, and Asia-Pacific between March 2013 and August 2015. KPMG analyzed a total of 750 fraudsters who were involved in acts committed in 78 countries. The survey examined “white collar” crime investigations conducted across the regions where the perpetrator was known and detailed contextual information on the crime available. It incorporates the observations and views of KPMG Investigations leaders in 81 countries across the world. The report builds on a similar study conducted in 2013.