KPMG warns of fraud increase

"The truth is that one reason fraud levels have been increasing recently is that technology has enabled more frauds to be committed. Where there is opportunity, there is fraud."

So says financial services firm KPMG. In a statement about the organisation's annual Fraud Barometer report, Alex Plavsic, KPMG's head of fraud investigations said:

"Technology has given rise to a new raft of frauds, such as email hoaxes (phishing), ID theft, and skimming."

KPMG said that in recent years there has been a "dramatic increase in the number of frauds committed in the UK." Between 2003 and 2006, over 800 frauds of £100,000 or more came to court – more in those four years than the previous 12 years.

Plavsic warned that fraud has increased throughout the country, where it was once predominently in London and the South East.

"London and the South East is still the home of most of the largest frauds by value, but there has been a notable increase in fraudsters' activity everywhere around the country," Plavsic said. "The fraud threat has steadily rippled out around the UK."

KPMG said that the Government has become the predominant fraud target, followed by financial institutions. However, those financial institutions have improved security practices, and succeeded in lowering fraud since 1993.

In a separate statement, KPMG advised corporates to monitor employee behaviour to identify "suspicious trends", especially in the light of the 'credit crunch' precipitated by the US subprime lending situation. Hitesh Patel, a partner at KPMG Forensic, said:

“Levels of fraud continue to remain disturbingly high. Given the developing economic conditions, companies and individuals need to be more alert than ever to the fraud threat. At a company level, they should bolster their routine monitoring and oversight processes with the use of data analytical tools to identify any unusual or suspicious trends."

Obviously large organisations need to be aware of their employees' backgrounds, if those employees have access to sensitive data, but organisations also need to take into account data protection legislation -- and also be aware of the level of monitoring employees will tolerate before they throw up their hands and say "You just don't trust me."