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UK fraud makes massive leap to £2.3bn

Author: ICAEW Insights

Published: 28 Feb 2024

Reported cases of fraud are rising and the amounts involved are getting larger – but still fewer than one in seven fraud offences are reported to the police.

UK fraud jumped “alarmingly” in 2023 as the value of Britain’s total reported fraud rose to £2.3bn, the second-largest annual fraud total in the past decade, representing a 104% increase on 2022 figures, new research reveals.

Corruption made up the largest type of fraud by value at £594m, representing 26% of the total, while second ranked tax fraud represented 23% or total reported UK frauds in 2023, according to BDO’s FraudTrack 2024.

Kaley Crossthwaite, Partner, Forensic Accounting and Valuation Services at BDO, says two trends emerged from an analysis of the data over the past decade: the number of reported cases of fraud is increasing and the amounts involved are getting bigger. 

Crossthwaite predicts that rising fraud is a trend likely to continue as artificial intelligence and the latest fraud-enabling technology provide fresh opportunities for fraudsters. 

The number of reported cases also rose by 18% to a three-year high, but fewer than one in seven fraud offences were reported to the police or national fraud reporting centre Action Fraud in 2023. BDO says it is clear the number of cases covered by its study of reported fraud is likely to be significantly below the true levels of fraud within the UK. 

The majority of the 2023 fraud total, however, consisted of just two long-running cases. These were the £585m settlement of a bribery case at gambling conglomerate Entain, and a tax evasion case linked to motor sport magnate Bernie Ecclestone, which resulted in him making a £650m payment to authorities. 

New opportunities

BDO FraudTrack 2024 covers cases with a value of more than £50,000 reported between 1 December 2022 and 30 November 2023. It found that the past year saw a range of socio-economic and geo-political factors contributing to the overall increase in fraud.

Rising energy bills, inflation and global supply chain cost rises increased financial strain on large numbers of individuals and businesses alike and “may have provided extra incentive for perpetrators to rationalise committing frauds”, the report says. 

There were also large increases reported in online scams throughout 2022 and 2023, with UK banks warning of “an epidemic of scams” and huge spikes seen in fraudulent Authorised Push Payment transactions. 

Technology continues to be a huge enabler for fraud, with Barclays Bank reporting in 2023 that more than 70% of scams were now happening on social media, online marketplaces and dating apps. In the same year, the UN also disclosed that such fraud factories are generating billions of dollars in revenue worldwide for criminals.

Caryn Deeley, Head of Forensic Accounting and Valuation Services at BDO, says: “ Sadly, I’m not surprised by this increase in reported fraud numbers. It is consistent with the significant surge of frauds our forensic investigations team have seen on the ground this year, including a cybercrime pandemic and a wide array of financial statement misstatement frauds.” 

Oz Alashe MBE, CEO of behavioural science and data analytics company CybSafe, says cyber criminals are continuously harnessing new technology to make online fraud execution easier and attacks more difficult to identify and combat. 

Alashe praised the introduction of the UK government’s Online Fraud Charter as a “step in the right direction”, but says it is crucial that businesses create an open and honest security culture that promotes reporting cyber concerns without fear of reprisal. 

The Online Fraud Charter is a voluntary agreement between the government and the technology sector to reduce fraud on their platforms and services.

“Good awareness and education will go a long way in protecting individuals and businesses against attacks, but if admission is likely to lead to punishment, they will do little to protect an organisation from a workforce unwilling to put their heads above the parapet,” Alashe says.

London and the South East was the number one hot spot for fraud this year, accounting for 73% of the total monetary value reported in 2023. The East Midlands became the second most prevalent region for UK reported fraud, leaping from 12th to 2nd place in the year, marking a leap of more than 10,000% in fraud value. Yorkshire was also ranked as one of the top five hot spots for fraud, according to the BDO analysis.

Economic crime hub

In these articles and videos, we explore the latest trends and perspectives on economic crime from around the world, and look at how chartered accountants can help prevent it happening.

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