Pandemic could lead to a 'tsunami' of fraud cases, warns KPMG

The report compiled by the professional services firm KPMG found a dramatic drop in the volume and value of fraud cases coming to Yorkshire’s courts during the first half of 2020, as measures introduced in response to the COVID-19 pandemic led to the closure of many courts.

KPMG’s bi-annual Fraud Barometer, which measures fraud cases with losses of £100,000 or more reaching the UK courts, found that only two cases with a combined value of £887,550 were heard at Yorkshire’s courts between January 1 and June 30 2020, compared with 14 cases totalling £9.7 million during the same period last year.

Annette Barker, KPMG’s Yorkshire-based head of forensic in the regions, said: “With many of our regional courts closed temporarily during the pandemic, it is perhaps reasonable to assume the true extent of fraud committed across the region has been somewhat masked – not least as previous crises tell us that increased financial pressures on individuals can often drive increased criminal behaviour.

“Looking ahead, we expect the fallout from the uncertainty caused by the pandemic to dramatically accelerate the levels of fraud hitting businesses, government and individuals.

“It is therefore absolutely vital that businesses and consumers remain vigilant as the region’s organisations enter what is likely to be a very challenging economic climate which will only drive fraudsters to take full advantage.”

The cases to reach the region’s courts during this period included a woman who received a suspended sentence for defrauding her elderly mother of more than £120,000. In the other case, a man went to jail for storing and selling illegal tobacco products worth more than £760,000 in unpaid taxes.

Nationally, KPMG’s Fraud Barometer, revealed that only 76 cases of alleged fraud were heard in the courts across the country in the first half of 2020, down from 217 cases prosecuted during the same period last year. This 65 per cent decrease reflects the significant impact of the COVID-19 crisis on law enforcement.

Roy Waligora, KPMG UK Head of Investigations, said: “The COVID-19 environment has led to increased financial pressures on individuals and organisations leading to more opportunities to commit fraud.

“This is likely to lead to further risk of financial misreporting and of misconduct and fraud in traditional hot spots such as procurement and supply chain. Given the elevated pressure on the Courts, business leaders should assess fraud risks and remind employees of anti-fraud policies.”

Almost £460m of alleged fraud hit UK Courts in the first six months of the year, up by 44 per cent compared with the same period in 2019, according to KPMG’s research.

One film piracy case, which if successful would have cost the industry an estimated £200m, nearly doubled the value of fraud committed to July 2020.

In a statement, KPMG said: “By excluding this outlier, the data demonstrates a significant decrease in the value of fraud cases compared to last year; from £319m in 2019 to £260m in 2020.”

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