Fraud hits £3.5bn in 'extraordinary year'

Fraud in 2011 has topped £3.5bn per year, according to KPMG’s fraud barometer.

The massive increase has come despite financial institutions implementing leading-edge technologies and strategies to combat fraud and money laundering, and they continue to come under “relentless attack”, the report said.

£2.5bn worth of fraud was recorded during the second half of the year – including five large fraud cases of more than £50m each appearing in court.

The report details one rogue trader case (which has not yet been tried) that accounted for £1.3bn. Even without its inclusion, the six months to December 2011 would still have seen the largest amount of fraud ever recorded by KPMG in a six-month period.

KPMG forensic partner Hitesh Patel said: “2011 was an extraordinary year for fraudsters – as demonstrated by the record losses through large-scale cases of fraud that dominated the headlines.

“The economic uncertainty has been the double-edged sword behind these numbers: companies and government agencies have rooted out more fraud through implementing austerity measures and operational changes, while at the same time the pressures on individuals as a result of the downturn continues to act as a catalyst for more fraud being perpetrated.”  

He added: “These figures represent the thin edge of a much bigger wedge”.