Rise in fraud causing Courts backlog

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fraud causing court backlog

During the first half of 2022, the value of alleged fraud cases exceeding £100k heard in UK Crown Courts soared by almost 300% compared to the first six months in 2021, rising from £137.4m to a staggering £532.6m.

This is above the total value of alleged fraud seen in Crown Courts during the whole of 2021, which reached almost £445m, demonstrating that the eruption of fraud sweeping the UK is showing no sign of slowing according to new research by KPMG.

The volume of fraud cases reaching UK Crown Courts in H1 2022 was slightly lower than the same period in 2021, having decreased from 149 cases to 129 cases – a fall of 13%. This demonstrates that the Courts remain under severe pressure to resolve fraud cases, which became backed up during the peak of the pandemic and will continue to accumulate as the country deals with new crisis that fraudsters will inevitably exploit.

The data also revealed a spike in high-value fraud cases reaching the UK Courts in H1 2022 compared to the first six months in 2021. There were seven cases seen valued between £10m-£50m and one case over the £50m mark to the value of £266m. There were no cases valued over £50m seen during the same period last year.

Professional criminals were once again the main perpetrators, responsible for 57 cases of fraud worth a total of £378m. This was down in terms of volume compared to the same period last year (67 cases), but the value went up dramatically by 319%, from £90.2m to £378m.

Advance fee fraud, when fraudsters target victims to make advance or upfront payments for goods, services and/or financial gains that do not materialise, has jumped from two cases in H1 2021 worth £1.2m to nine cases in H1 2022 worth £11.6m.

Fraud carried out by employees went down by nearly two thirds in terms of volume, from 38 to 14, and nearly halved in value from £20.1m to £10.7m. However, fraud carried out by management rose from £23.3m for 31 cases in the first half of 2021, to £110m for 34 cases in the first half of this year, an increase of 372%.

Fraud allegedly perpetrated by a private individual jumped from £1.9m for seven cases in H1 2021 to 14 cases seen in the first half of 2022 to the value of £26.2m.

Roy Waligora, Partner and Head of UK Investigations at KPMG, said “Fraud cases continue to stack up and UK Crown Courts are struggling to make headway in prosecuting these criminals. A positive announcement of a new Public Sector Fraud Authority was announced in the Spring Statement, with a funding injection of £24.7m to crack down on criminal gangs who rip off the taxpayer. But if it takes years for fraudsters to be prosecuted because of the case backlog, it will be some time before the impact of this initiative is felt.”

The situation for the General Public in terms of fraud is dire and the outlook is even worse. In June this year, UK Finance1 said that the UK is experiencing an “epidemic of fraud” and the latest Fraud Barometer figures support this assessment. In the first half of 2022, the General Public were the group scammed most by volume with 47 cases reaching the UK Crown Courts. Furthermore, the value of fraud allegedly carried out on the General Public went up by 74% – from £43.1m in H1 2021 to £75m during H1 2022.

Waligora continued “That criminals are still taking advantage of susceptible members of the public is distressing to see, particularly when considering the Fraud Barometer only captures cases where charges are over £100k. With the cost-of-living and energy crises beginning to bite, these both create fresh opportunities for fraudsters to commit even more crimes against the public, and people need to be made aware of new emerging scams. But it isn’t solely individuals’ responsibility to educate themselves. Banks, Government, and technology companies all need to play a part to make any progress in tackling the issue.”

For the first six months of 2022, Financial Institutions had the most fraud cases reach UK Crown Courts by value, at a total worth of £305.2m for nine cases, a vast jump of 4,333%, up from £6.9m for 13 cases during the first half of 2021. In the context of a changing global banking landscape, where branch networks are shrinking, volumes of digital payments are increasing and payments are being processed in seconds, the data illustrates that fraudsters are creatively finding new ways to steal more from financial institutions and their customers.

Waligora, said “Customers see the role of financial institutions as keeping their money safe and do more to prevent fraud, but the latest Fraud Barometer data suggests that this is a real challenge. In tandem, customers expect a certain level and speed of service, which could be hindered by additional fraud prevention measures, such as Strong Customer Authentication (SCA), introduced in March this year.”

Money laundering cases were by far the most significant type of fraud in terms of value at £297.6m for seven cases in H1 2022, rising 16,781% from £1.8m for five cases in the first six months of 2021. This was largely due to a single high value case of £266m, where money was laundered through a company bank account and the proceeds used to purchase gold over a period of two years.

Triggered by Russia’s invasion of Ukraine, the newly passed Economic Crime Act and a second Economic Crime Bill that is expected in the coming months, contain measures designed to increase transparency and give law enforcement enhanced powers to combat money laundering.

They also provide law enforcement with enhanced anti-money laundering powers to encourage businesses to share information on suspected economic crime. As a result of this legislation, in the short term there is likely to be an uptick in this kind of fraud reaching UK Crown Courts as more of this type of crime is identified.

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