60% of frauds committed against commercial businesses were perpetrated by ’insiders’ according to new KMPG report

The risk of Asia Pac businesses being hit by fraud has dropped significantly in the past year though businesses more likely to be hit by fraud perpetrated by professional criminals, new figures from KMPG have shown.

In the period October 2016 to September 2017, there were 155 frauds reported with a value of $482m – a significant drop from the previous year, which saw 259 frauds worth $823m.

The data showed an increasing proportion of fraud against government bodies, and increasing levels of cyber-related and identity theft risks.

Gary Gill, KPMG Forensic Partner, said: “This is the first time in several years we have seen a decline in reported fraud – and the scale is surprising. Reported frauds can and do fluctuate due to various factors, but lessons about being more vigilant and aware of fraud risks seem to have been taken on board by companies”.

“But fraud perpetrated by professional criminals is a growing problem – this was second only to business insiders. Identity theft has risen sharply and while still a relatively small proportion of the overall fraud losses, we can expect this to climb as organised criminals target this area, using technology effectively”.

Some of the key findings are: 

  • Technologically sophisticated fraud (including hacking, compromising computer accounts, skimming digital data and porting mobile phones) accounted for 6 percent of all frauds and 7 percent of value ($33.8m).
  • Loss due to identity theft also saw a sharp increase to nearly $17.9m.
  • The average value of a fraud remains fairly constant at around $3.1m.
  • 60 percent of frauds committed against commercial businesses were perpetrated by ”insiders”, whereas Government and Financial Institutions were mostly targeted by external fraudsters.
  • $7m worth of cases involved money laundering charges.
  • Management level staff committed the same volume of frauds as professional criminals – each 22 percent of all cases – but the former accounted for 38 percent of total value and the latter 50 percent. General employees accounted for 26 percent of frauds but only 4 percent of the value. The number was similar to last year but much less in dollar value.
  • The most significant losses were seen as a result of embezzlement, fraudulent investment schemes and ‘boiler room’ scams – the average value of losses due to embezzlement increased this year from $6.6m to $7.6m.