According to a new report by KPMG, technology was found to be a significant enabler for a quarter (24 percent) of the 750 fraudsters investigated by forensic specialists across 81 countries. By contrast, the Global Profiles of the Fraudster report reveals that not enough proactive analytics are utilised in detecting fraud, with only three 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 at KPMG: “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 a must have for organisations on the look-out for anomalous or suspicious behaviour.”
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.
“In South Africa we see some similar trends in general, indicating that the attributes of fraudsters are somewhat universal, even though the face of the fraudster is ever changing and some country or region specific drivers do lead to slight differences,” says Nosisa Fubu, Partner at KPMG Forensic in South Africa.
Weak internal controls were a factor for 61 (SA - 30) percent (SA – Reckless dishonesty regardless of controls was the greatest factor at 42 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. These stats actually refer to: the number of fraudsters whose overriding motivation to commit their acts “because they could” rose to 27 percent (SA – 33), from 18 percent (SA – 16) 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 11 (SA -18) percent of the cases and an additional 21 (SA – 42) percent recklessly defrauded with no regard for the controls.
“Globalisation and regulation are just a few of the megatrends for why controls are more important than ever in business today,” said Ostwalt.
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.