BDO Annual Fraudtrack Report: A Year In Review 2016


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BDO recently published its annual report on fraud which showed that fraud cases have increased despite companies' efforts to strengthen their systems.BDO's Fraudtrack report is based on all publically reported fraud cases between 01/12/15 to 30/11/2016 with a value over �50,000. It is the fourteenth consecutive year BDO have published the report leading to interesting results. The highlights include:

  • A five-year high in 2016: The total value of fraud cases increased by over a third to �2.0bn.
  • The total number of cases decrease slightly: London and the South East remain at the biggest risk of fraud in the UK.
  • Money Laundering, tax fraud and third party fraud (fraud committed by customers or suppliers) had the highest value in 2016. However, a huge carousel fraud case valued at �1bn led to an anomalous 220% increase in tax fraud.
  • Money laundering itself decreased by 58% and third party fraud decreased by 38%.
  • Fraud against individuals showed a downward trend in value of frauds.

Money LaunderingIn the public administration sector, after from tax fraud, money laundering was the second highest type of fraud in 2016. BDO found that although it totalled �4.4m in value, this was a 78% decrease in the sector from �20.1m in 2015.Money laundering also accounted for 46% of cases within the finance and insurance sector, totalling nearly �100m. However, this was also a decrease of over half from 2015.Unreported fraud: a true picture? Fraud statistics are difficult to digest and rely upon due to the fact that not all cases are reported publically. As Kaley Crosswaite, partner and head of fraud at BDO stated ''many high value complex fraud cases continue to be dealt with outside the judicial system as companies prefer to handle these situation privately to avoid the reputational damage to their businesses.'' The report also suggests that the number of fraud cases is increasing regardless of companies' effort to strengthen their systems.Prevention: what can you do?BDO makes it clear that being proactive is key to preventing Fraud. Although having robust system and controls is vital for any company or individual, it is important that these systems are frequently checked and tested to ensure they remain effective. Additionally, human error or vulnerability is often the way a cyber-hacker can commit fraud within a company. Sufficient training to members of staff will develop confidence when using technology that could be at high risk. Social engineering training is another important prevention method as it allows staff to identify possible methods of fraud which could prevent substantial financial loss.If you would like more information on the prevention of fraud or feel you have been a victim of fraud please contact David Bailey, partner of Healys, with over 25 years of experience dealing with commercial fraud and all aspects of commercial litigation. Email: Telephone: 01273 810 064

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