Buyers on alert as fraud hits new high

11 July 2011

11 July 2011 | Adam Leach

Buyers are warned to be vigilant of suspicious payment patterns after a KPMG report revealed that fraudsters have stolen more than £1 billion from UK businesses this year.

The report by the accountancy company said the amount of money gained through fraudulent activity between January and June this year shot up by more than 75 per cent to £1,069 million, from £608 million during the same period last year.

UK forensic partner Hitesh Patel said vigilant analysis of spending patterns and other company data is key to identifying potentially fraudulent activities.

“The evolution of e-commerce, as well as increased reliance on automated payment systems and the ability of professional criminals to stay one step ahead, has swollen overall UK fraud figures,” Patel said.

KPMG said initiatives such as whistle-blowing telephone lines, which provide employees with the opportunity to raise suspicions confidentially, and regular reviews of potential risk areas are key preventative measures.

The report goes on to warn that fraudsters will increasingly be turning their attention to the vast procurement budgets on offer in the run up to the London 2012 Olympic Games.

A previous attempt by one fraudster resulted in the Olympic Delivery Authority (ODA) paying out £2.3 million to what it believed to be one of its suppliers. It happened after the conman requested future payments to the ODA supplier be paid into a different bank account.

An ODA spokesman said: “Throughout the project we have worked with the Metropolitan Police Service to develop and refine our systems to meet the changing fraud risks and will continue to do so.”

While police were able to retrieve the money and jail the conman in April, the incident acts as a reminder for procurement professionals to be wary. The ODA now conducts independent verification checks on suppliers to protect against fraudsters.

KPMG said companies could limit exposure to fraud by conducting thorough assessments to identify the areas that leave them most vulnerable.

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