Scottish fraud skyrockets during 2022

Annette Barker, Head of KPMG Forensic in the UK
  • Value of alleged fraud cases in Scotland skyrocket by 194% during 2022
  • Total value of alleged fraud over £100k reaching UK Courts in 2022 was £1.12bn, an increase of 151% compared to £444.7m in 2021
  • Volume of cases has however fallen by 27% from 298 in 2021 to 219 in 2022
  • Latest KPMG Fraud Barometer released today – the longest-running UK survey of its kind

THE number of alleged fraud cases over £100,000 being heard in Scottish courts rose significantly last year, according to KPMG UK’s latest bi-annual Fraud Barometer.

A total of 24 cases totalling £17.4m reached Scottish courts in 2022, skyrocketing from 2021 when 16 cases worth £5.9m came to light, a value increase of 194%.

Commercial businesses were the victim of five cases of fraud in Scotland with a combined value of £1.3m. Four of these cases were instances of embezzlement fraud worth a combined total of £604k. By both volume and value, the general public were the victim of the most cases with 11 cases in 2022 compared to 3 in 2021. The total value of fraud against the general public also increased to £10.3m, up from £1m in 2021.

13 out of the 24 cases had a value of between £100k – £250k, however one case involved a 24-year-old Ayrshire man scamming £7 million from a top US Bitcoin broker.

Annette Barker, Head of KPMG Forensic in the UK, said: The dramatic increase of fraud cases coming to light in Scotland is worrying, particularly with many cases involving rogue employees abusing their positions of trust to steal money from their employers, clients and other partners.”

Sandra Aitkenhead, Senior Manager, Forensic at KPMG in Scotland, said: “Businesses must do all they can to maintain adequate controls to prevent serious fraud from being committed. Without the right safeguards in place, businesses across Scotland will unfortunately continue to be victims of crime and incur the reputational and financial damage which comes with it.”

Other cases of note in Scotland during 2022 include:

  • A 40-year-old woman who was charged with five fraud offences totalling £238.5k. These included scamming an 85-year old pensioner by pretending to be in a relationship with him and submitting fraudulent loan and vehicle finance applications on his behalf.
  • A 38-year-old woman pleaded guilty to a fraudulent cheque scam with a large bank after she deposited five cheques totalling £1.5m without having sufficient funds in her account.
  • A 37-year old businessman was imprisoned for 33 months for carrying out a £736k gift card scam after exploiting a ‘secret loophole’ in the system.

The total value of alleged fraud cases £100,000 or above heard in UK courts increased by 151% from £444.7m in 2021 to £1.12bn in 2022, according to data released in KPMG UK’s latest Fraud Barometer.

The figure for 2022 is similar to pre-pandemic values which saw a total value of £1.1bn for alleged fraud cases heard in 2019.

Figures from KPMG UK’s Fraud Barometer released today, found that despite the increase in total value of reported fraud cases heard in 2022, the volume of cases fell by 27%. A total of 219 alleged fraud cases reached the courts in 2022, compared to 298 in 2021.

While volume of alleged fraud £100,000 or above decreased and total value increased, the value was largely driven by five cases with a value of £50m or above which were heard in UK courts in 2022. These cases amounted to a total value of £648m, more than half the total value of all the fraud cases heard. This is a stark contrast to 2021 which saw no reported cases over the value of £50m.

The Fraud Barometer also noted that a number of other reported cases, involving significant sums, were reportedly settled so do not appear within the figures but reinforce the trend that the value of alleged fraud is significantly up on prior periods.  

Fraud cases against financial institutions halved in 2022, with only 16 cases being heard compared to 32 in 2021. Despite this, the value of fraud committed against financial institutions in 2022 increased dramatically by 2204% to £609.2m.

Commenting on the findings, Roy Waligora, Partner and Head of UK Investigations at KPMG, said: “In 2022, we saw the total value of fraud in the UK return to pre-pandemic levels as a few high value cases boosted the numbers. This comes as professional criminals have continued to attempt to line their pockets with high value fraud against financial institutions and their customers.

“The slight drop in volume of fraud cases heard does not mean that fraud in the UK was any less prevalent in 2022. The impact of fraud remains a real concern in the UK, however, the decrease in the volume of cases may be an indication of pressure on authorities and that some fraud cases are not resulting in charges, as recently outlined by the National Audit Office1.”

Fraudsters targeting general public as cost-of-living scams emerge

The general public remained the most targeted group by perpetrators of fraud by volume, although cases against them decreased by 22%. In 2022, the general public were the victim in 73 cases with a total value of £136.9m, compared to 93 cases with a total value of just under £116m in 2021.

These figures come as Action Fraud2 have been warning of criminals exploiting the cost-of-living crisis through scamming the general public.

Reflecting on the data, Roy Waligora, added: “The Fraud Barometer only looks at reported cases heard with a value of £100k or above in UK courts, so the likelihood is that the general public have been the victims of many more frauds. As the cost-of-living hits households, we are likely to see a combination of two things happen.

“Firstly, we are likely to see opportunist fraudsters target the public through specific scams relating to the cost of living, such as a recent energy rebate scam3. Secondly, there is likely to be an increase in frauds committed by more amateur criminals as people face financial difficulties. The public must stay vigilant, with the help of businesses, government and the police.”

Embezzlement remains top fraud type  

Embezzlement has remained the most common fraud type for 2022, albeit with fewer cases than in 2021. There were 36 cases of embezzlement with a value of £100k or above heard in UK courts in 2022, compared with 51 cases in 2021. However, the total value of these cases increased by 37% to £38.9m. This total value includes a case which saw an employee steal £6.7m from company accounts.

Roy Waligora said: “Embezzlement can be a big problem for businesses as employees and management look to exploit their positions. It is very important for businesses to have channels to report fraud and when businesses become suspicious about any fraudulent activity, that they act swiftly to uncover the facts so they can take decisive action against the individual or individuals. This is especially relevant as companies start to address the requirements of a Fraud Statement in their annual reports.”   

Money laundering and investment fraud see huge jump in value

In 2022, UK courts only heard one less money laundering case than the prior year, but the total value of money laundering cases increased by 694% from £68.2m in 2021 to £541.7m. This was bolstered by three cases with a value of £100m or above.

Investment fraud also saw a large increase in value despite only six more cases being heard in 2022 than in 2021. In 2022 19 cases were heard in UK courts amounting to a total value of £181.8m, compared to 13 cases in 2021 which had a combined value of £12.5m, a 1358% increase in value.

Roy Waligora said: “While these cases may seem alarming, it is positive that these cases are making it to UK courts as these alleged crimes are exposed. However, businesses and institutions themselves need to be doing more to stop money laundering activities which are achieving such high values.

“As for investment fraud, investors and potential investors need to be wary of any investment opportunities. They should ensure they are doing their due diligence first by seeking advice and checking the FCA register.”

Other key findings:

  • Of the 219 cases heard in 2022, 80% of cases involved male perpetrators and 32% were aged 36-45 years old.
  • Professional criminals were the main perpetrators, responsible for 92 cases of fraud and worth a total of £725.2m. This is an increase in value from last year by 130%.
  • Management was the second largest group of perpetrators by volume, accounting for just over a quarter of cases in 2022.
  • Cases of advanced fee fraud, such as romance scams and services paid for but not delivered, increased from nine cases in 2021 to 19 cases in 2022, with the value almost tripling to £16m.
  • Cash and equivalent instruments fraud, such as credit/debit card and counterfeit currency, cases doubled to 12 cases but saw a decrease in total value from £16.8m in 2021 to £14.1m as fraudsters carrying out this type of fraud focused on smaller values.
  • The London and South East Region still has the greatest proportion of the value of fraud. 56% in the year 2021 and 53% in the year 2022.

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