Financial Fraud Surges in UK

Michelle Remo, “Big 4″ observer
May 23, 2011 /

Cases of financial fraud committed against the UK government have jumped by 43 percent for the fiscal year 2010/11, or reaching £527 million according to KPMG’s Government Fraud Barometer.

The figure means a 43 percent increase in financial fraud cases spotted by the UK government since the financial crisis in 2008 following newer approach adopted by criminals.

In New Zealand and Australia, organizations suffered from both internal financial fraud and internet-based electronic funds transfer (EFT) facilities according to the “Fraud and Misconduct Survey” published by KPMG on February 2011. The results were based on the responses from 214 individual organizations that claimed their fraud losses climbed twice the $1.5 million average in 2008 results to $3 million in 2010.

Majority of these fraud cases involve tax, which scored 114 in 2010 alone based on court records that totaled £462 million. Tax frauds committed by criminals using new approach targeted carbon trading and green tax allowances.

Although actual charges filed against criminals involved in financial fraud dropped to 28 in 2010/11 fiscal year, from 33 in 2009/10 fiscal year, their worth was more than twice from £8 million to £18 million.

In 2010/11 fiscal year overall, total fraud reached £693 million, overtaking the earlier highs of £679 million in 2006/07.

In Yorkshire for example, Her Majesty’s Revenue and Customs got involved in a financial fraud worth £15 million during 2010/11 that included a £12 million tax fraud committed by Jayne Mitchell, a former secretary from Bradford.

The public largely suffered from crimes committed by professional fraudsters shown to be the foremost threat costing £709 million to public based on court records for 2010. Fraud against public purse soared 20 percent last year to 70 cases from 59 in 2009.

The most controversial of them all was the case of Michael Richards, a businessman tagged in a major tax fraud in UK costing £103 million. He was accused of defrauding investors’ fund into green technologies.

HMRC detected the multi-million pound scam in a regular VAT check of business records. It was dubbed as one the biggest VAT frauds in UK, leading to the 10-year imprisonment of Mitchell for her involvement in a group of fraudsters that imported over 7,000 new vehicles through sham companies.

The illegal transaction generated more than £80 million in two years. Financial fraudsters usually resorted to physical acts of crime, such as robbery, before, noted Vivien Osborne, forensic director at KPMG in Leeds, but now they can do the same fraud with the same returns but without the worry over the risks involved.

“This is fuelling the audacity and ambition of professional criminals, driving up the size of a fraud.” Osborne added that large-scale financial fraud has become much easier to commit at present given the advent of modern technology such as the internet and call centers.

 

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