Bank fraud rockets in wake of credit crunch
Bank fraud has risen in the wake of the credit crunch
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Tuesday, 29, Jul 2008 11:49
Fraud against banks has spiralled to £630 million over the last six months and worse is yet to come as the full impact of the credit crunch unfolds, accountants KPMG have warned.
Over £630 million of fraud came to court across 128 cases, up from £421 million across 91 cases in the previous six-month period, KPMG said in its latest fraud barometer, with banks seeing record levels of fraud.
The six-month high was fuelled in part by two big cases – an alleged £220 million attempt to hack into Sumitomo Matsui Banking Corporation's systems, and a £70 million attempted fraud within HSBC's securities services division.
Even without these two cases, however, there was over £60 million of fraud against financial institutions coming to court. In the whole of 2007, there was only £37 million.
Hitesh Patel, partner at KPMG forensic, said: "Fraud remains extremely prevalent in the UK with professional gangs accounting for over two-thirds by value, ranging from investment stings to trading scams, card fraud and money laundering.
"Mortgage fraud cases have started to come through in the courts too - and it seems likely that there will be many more to come."
There were nine cases of mortgage fraud worth over £20 million in the first half of this year, compared to just 10 cases at £3.7 million for the whole of 2007.
Mortgage fraud takes place when an individual applies for a home loan with false documentation or lies about their income.
With mortgages now more difficult to secure, banks are seeing a rise in this type of fraud and the Financial Services Authority (FSA) has recently launched a campaign to drive down cases.
Probably the most bizarre case to come to court in the first half of the year involved a former HGV driver who pretended to be a property developer and attempted to sell the Ritz hotel for the bargain price of £250 million to an investor.
The fraudster managed to con the victim into handing over £1 million.
Mr Patel said: "The ingenuity and audacity of fraudsters often simply catches people off their guard. That is why companies and individuals need to be fully alert to what is, in these challenging economic conditions, an ever-present and growing threat."