The top five financial crimes – what they are and what to watch for

The illegal and covert nature of financial crime means it is difficult to identify the crime being committed, measure its frequency and estimate the value of economic damage caused, as Katherine Gillespie, managing director KPMG Ireland and its Forensic team lead, explains.

Payment card fraud

Payment card fraud is the use of compromised bank details to obtain funds from our bank accounts. “The prevalence of online shopping and payments means there is increased opportunity for fraudsters. When combined with the advances in technology, there is an increased number of fake websites and it is becoming much harder to detect which sites are real and which are not,” says Gellespie.

Asset misappropriation (including embezzlement)

Asset misappropriation is the most prevalent type of fraud committed in the workplace. These are frauds that involve employees stealing or misusing a company’s assets, whether that be cash or other assets.

“These types of fraud may not always lead to large loss for companies,” says Gillespie. “However, they happen because people feel desperate, pressured by factors such as gambling addictions, health problems or crippling debts. People can also be lured by greed and an easy financial gain.”

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Money laundering

Money laundering is the process to hide the origins of criminal proceeds, such as from corruption, drug and people trafficking, or terrorist funding.

“Criminals want to be able to access and spend these ‘clean’ proceeds without arousing the suspicion of authorities. A worrying trend in this area is the increase in money mules, where people are drawn into helping criminal gangs in return for payment. People don’t often think about the suffering caused to obtain the funds that they are helping to launder.”

Cybercrime

Cybercrime is ever prevalent and both individuals and companies are targets. “It can range from hacking a company’s IT systems and demanding ransom money to sending emails that purport to be from a supplier or senior employee requesting payments be made. Often there is some sense of urgency evoked and people seek to act quickly, only realising afterwards that they have been duped,” says Gillespie.

Investment fraud

“Investment frauds occur when people are encouraged to invest in schemes and projects that do not exist or where those behind the schemes misuse the funds invested for personal gain. With lower interest rates, people have been looking at alternative ways to invest their money and this has created opportunities for fraud.”