There was a sharp decrease in number and value – but the average value of a fraud remains constant at around $3.1M. This is the good news.
The less pleasant findings show an increasing proportion of fraud against government bodies and increasing levels of cyber-related and identity theft risks.
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, but it does seem lessons from previous years about the need to be more vigilant and aware of fraud risks may have been taken on board by potential victims.
Professional fraudsters are on the rise
The growing proportion of fraud is now perpetrated by professional criminals – this was second only to business insiders.
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 like last year but much less in dollar value.
Identity theft is growing
Identity theft has risen sharply and while it remains a relatively small proportion of the overall fraud losses, we can expect this to climb as organised criminals use technology to target this area. Often with substantial rewards.
Government organisations were a primary target with a large increase in their proportion of fraud losses; much of it perpetrated by outside parties.
Fraudulent compensation and funding claims are a growing problem.
But it is encouraging that nearly $10m of fraudulent claims for compensation were identified during this period, most by the CTP fraud taskforce, a multi-agency task force set up in 2016 to “deter, detect and prosecute fraudulent claims” and, NSW Police’s Strike Force Ravens.
Many of these frauds involved CTP claims made over fake, staged or minor accidents. It shows concerted effort by the authorities to target fraud can be successful. For too long in Australia, white-collar crime was not regarded as a priority – hopefully this is changing.
The southern states rule in value – Queensland in numbers
NSW and Victoria surged past Queensland in the value of fraud, with the southern states accounting for 78 percent of the total value, with NSW at $219m and Victoria $158m.
Queensland still topped the number of frauds, but it fell 44 percent in number and 83 percent by value. In South Australia, the number of frauds dropped by 50 percent and the value fell by 65 percent compared to the last period.
Overall, the significant decline in reported fraud last year was good. But, given the drop may be part of the natural ebb and flow of court cycles and investigative processes, we will need to see a continued fall over a longer period before we can uncork too many champagne bottles.
We will be keeping a keen eye out for the first half findings for 2018.
For those who enjoy the numbers here are some more key findings:
• Government organisations experienced the highest total value of fraud at $199.1m.
• 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.
• 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.
• 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.
• 78 percent of frauds were perpetrated by a person working alone. The proportion of frauds committed by groups has increased from 18 percent to 22 percent. Men committed 66 percent of offences.
• Although Investors represented only 10 percent of victims, their losses were almost as significant as the government ($180m). Even so, figures this year represented a drop. Investors were victims of 10 percent of the frauds and 38 percent of the loss, down from 17 percent of frauds and 44 percent of loss previously.
Article first published by Gary Gill, Partner Forensic KPMG Australia.
