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.
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 a Fraudster report 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/Qatar 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/Issa Habash, head of Risk Consulting in Bahrain/Qatar said: “increasingly, we are seeing clients become more aware of the risks they face, however it’s vital that effective and sustained action is taken to prevent fraud incidents. With more businesses and organizations looking at streamlining and cost optimization measures to mitigate the impact of low oil prices, it is an ideal time to simultaneously, tighten internal governance and controls to protect against fraud.”
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
• Between the ages of 36 and 55 (69 percent of fraudsters investigated).
• Are a threat from within (65 percent are employed by the company).
• Could very well be executives or director level (35 percent), who have been with the company for at least six years (38 percent).
• Have unlimited authority in their company and are able to override controls (44 percent of fraudsters investigated).
• Fraudsters are most frequently described as autocratic (18 percent) and are three times as likely to be regarded as friendly as not.
• Are likely esteemed, with 38 percent of fraudsters describing themselves as well-respected in their organization.
• Likely to have colluded with others (62 percent of frauds, down just slightly from 70 percent in the 2013 survey).
• While personal gain was the predominant overriding motivation for fraudster (60 percent), greed was the second most common factor at 36 percent and the sense of ‘because I can’ was third at 27 percent.
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
• Fraud is more frequently perpetrated in collusion with others than alone (62 percent against 38 percent respectively).
• While most collusion happens in mixed company (46 percent), men still tend to collude more than women do (39 percent of colluders are groups of men vs. 7 percent of colluders are groups of women).
• External parties are involved in 61 percent of the instances where the fraudster is colluding.
• 44 percent of fraudsters were detected as a result of a tip or a complaint; a further 22 percent were detected as a result of a management review.
“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.
©2017 KPMG, Qatar Branch is registered with Ministry of Economy and Commerce, State of Qatar as a branch of KPMG MESA Ltd and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ©2017 KPMG LLC, a limited liability company registered with Qatar Financial Centre Authority (QFCA) and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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