For the period April 2016 to September 2016, the total value of frauds rose by 16 percent to a total of $442m, from $381m in the previous six month period – although average value per fraud fell slightly, from $3.3m to $3.1m.*
Frauds perpetrated by professional criminals notably rose by 300 percent – although the majority of frauds are still carried out by company insiders – with technology playing an increasing role.
Gary Gill, Head of Forensic at KPMG Australia, said: “Our Barometer shows that fraud continues to rise relentlessly in Australia. A notable finding this time is an eight-fold increase in frauds targeted at financial institutions. This is an issue that firms in that sector need to take seriously.”
“Both public and private organisations openly acknowledge that cyber-attacks are one of the most prevalent and high-impact risks they face, and yet many operate on the basis ‘it won’t happen to me’. Organisations must keep abreast of the cyber threats, both physical and digital, to ensure the protection mechanisms don’t become obsolete given the pace of technology and business change. You can have a variety of IT protections in place to defend yourself, but it’s all for nothing if you are tricked into giving away the keys to the electronic vault.”
Key findings include the following:
- The most common perpetrators are business ‘insiders’, with 36 percent of frauds attributable to company management – but professional criminals are now to blame for 20 percent .
- Frauds are now being more evenly spread across the age range – 46-54 year olds are highest with 28 percent, but 25 percent are carried out by people below 36 – a big rise compared to previous studies and high by international comparison
- There has been an 8-fold rise in the value of frauds carried out against financial institutions, although government agencies and investors are still the likeliest victims
- 40 percent of frauds in Australia take place over a five year period before being discovered – detection is taking too long
- 62 percent is motivated by personal greed Queensland has cemented its unwelcome title as fraud capital of Australia – more than half (55 percent) of the frauds were reported in the Sunshine State, and is largely attributed to the number of investor frauds 22 percent of frauds used technology – including credit card fraud; hacking into financial systems; use of fake adverts; creation of regular electronic transfers and the use of online betting accounts to launder money.
Gary Gill said: “Our UK colleagues have just issued their own fraud barometer, which showed that fraud there had risen by 55 percent with a large rise in cyber-crime – so it is an international problem. Businesses in Australia and overseas need to guard themselves against the perennial threat of the ‘inside job’ and the rapidly increasing danger of cyber-attack from outside and within.
“Consumers are also affected – through the rapid rise of technology and online platforms, more people than ever are being targeted by fraudsters who have unrestricted access to a larger pool of victims. However, we are also seeing the internet being used by consumers who are being tempted to obtain goods and services that they perhaps should have a fair idea are not legitimate. Consumers may often turn a blind eye, or consider this a victimless crime, but there are cases both at home and overseas which show individual victims who ended up paying a high price.”
KPMG also urges companies to recognise the important role of whistle-blowers.
Gary Gill said: ”A number of frauds in the research were uncovered by whistle-blowers, who noticed suspicious behaviour and appropriately raised these concerns so they can be actioned. This is often the way that fraudsters are caught and held accountable for their actions.
“No matter what systems and controls are put in place, the best defence is often an employee noticing something amiss. It is important that they have a safe and confidential mechanism to report suspected fraud. Many organisations are now using such a service.”
