Fraud in the UK hits twelve year high

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LONDON – Fraud reached its highest level in 12 years in the UK last year – costing £1 billion – according to a new study by financial accountants KPMG. This figure includes fraud against all types of industries, including the government.

The report reveals fears that recent financial turmoil and increasing pressure on the industry may increase the risk of fraud, as well as the discovery of it. More people may attempt to ease personal financial burdens by turning to fraud. At the same time, firms are scrutinising operations and collectively belt-tightening—meaning that they will be more likely to uncover existing frauds.

As the debris clears from last month’s rogue trader fraud at French bank Société Générale (SG), there is some comparatively good news for UK banks, with only £37 million worth of fraudulent transactions directed at them for 2007—down from £140 million in 2006—and little change in the level of insider fraud.

But the survey found that fraudsters are also increasingly sophisticated, with 90% of frauds carried out by organised crime gangs and only 197 cases brought to court – down from 277 in 2006.

“Levels of fraud continue to remain disturbingly high. Organised gangs have been more active than ever, with a proliferation in VAT frauds, ID thefts and other forms of white collar crime,” said Hitesh Patel, a partner at KPMG Forensic.