Reported fraud in the UK reached a five-year high, rising 31.5 per cent on the year to £2bn in 2016.

Accountancy and business advisory firm BDO LLP has found that while the total volume of cases reported had fallen from 519 cases in 2015, to 504 in 2016, the average cost had risen 35.4% to £3.9m., with London & the South East and the Midlands being at the highest risk.

Fraud word cloud

Sector highs and lows

The industry sector with the highest level of reported fraud was public administration, which saw an increase of 204.7% on last year, which made up £1.4bn of the UK total. This was due in large part to a single VAT “carousel fraud” case involving a woman from York, worth roughly £1bn. Even after stripping out this single case, the sector still shows a sharp increase in the volume of reported fraud, most of which involves various types of tax fraud.

The volume of fraud cases in public administration also rose by 31.5% to 150 cases in 2016, in stark contrast to the reported fraud situation in the financial services sector. The financial services sector saw a decrease of 62.1%, from £567.2m in 2015 to £214.9m in 2016. The volume of reported fraud also fell, dropping from 70 cases in 2015 to 58 cases in 2016.

Within the sector, money laundering showed the biggest fall in total value, but saw an increase in the number of cases, which rose by 33% to 20 cases. A significant portion of the total fraud value of £99m in 2016 was attributable to a single case in which a man arrested by the City of London police on suspicion of money laundering was found to be holding £30m worth of banker’s drafts in his home in the Welsh valleys.

Regional hotspots

Looking at fraud geographically, London & the South East and the West Midlands remain the biggest hotspots for fraud in the UK, despite a significant fall in the value of fraud compared to last year.[1] The largest case in London involved a £79.5m Ponzi scheme operated by an electrical wholesaler who claimed they had won a contract t supply electricals to the London Olympic Village.  Victims were persuaded to invest hundreds of thousands of pounds to meet urgent orders then paid seemingly high returns before being asked to “roll over” their investments for two months.

Fraud against individuals – Elderly and vulnerable remain at risk

Fraud against individuals rather than companies has traditionally always been the most common type of activity by volume, and 2016 was no different, when it accounted for 30% of all reported cases. Analysis showed that the majority of cases continued to target the elderly and vulnerable.


[1] This excludes Yorkshire, which rose 388.1% to £1.2bn due to the £1bn VAT carousel fraud attributed to a women from York.

How AuditWare can help fight fraud

At AuditWare, our data analytics and continuous monitoring related technology is helping with the fight against all types of public (to include NHS) and private sector/corporate fraud.

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Read the source article here.