Businesses in the North-east of Scotland are being warned to be aware of increasing incidents of supply chain fraud as criminals seek to exploit online payment processing systems.
Professional services firm KPMG has seen a rise in the number of companies being targeted by fraudsters seeking to substitute their own bank details for those of genuine companies. The oil and gas industry, with its extensive and complex supply chain, is particularly at risk from these approaches, with criminals using a variety of legal and illegal means to identify suppliers and their customers.
The latest edition of KPMG’s biannual Fraud Barometer, which tracks fraud in the UK, revealed a substantial rise in supply chain fraud, as criminals pass themselves or their products and services off as genuine. Customers were often unaware they had been tricked by an imposter or that they had bought counterfeit goods. This type of fraud across the UK accounted for £99million in the first two quarters of 2015, an increase of £70 million on the same period last year.
Scott Grant, fraud investigations senior manager with KPMG in Aberdeen, said: “Criminals are inserting themselves into the supply chain, and unwitting buyers often genuinely do not realise they are dealing with an intermediary that is targeting weaknesses in company controls. This issue has been aggravated by the sheer volume of transactions conducted online.
“Criminals are inherently adaptable and have seamlessly moved with the times, adapting the way in which they target victims to take advantage of advances in technology and anonymity afforded by digital commerce.
“A prime example is the substitution of the fraudster’s bank details for those of a genuine supplier with the request coming by phone, email or letter. The fraudsters will often have thoroughly researched their target and be aware of who they transact with, having gleaned the information from the public record or by data theft and infiltration of client email systems.
“It is therefore essential that companies ensure that their own business processes take account of the risk of fraud and have appropriate checks and balances in place to combat it. In the example above, a simple check with the supplier would reveal whether or not a request to change bank details is genuine. However, we have seen many cases where the request was processed in good faith and the fraud only came to light when the real supplier chased for payment.
“Our specialist forensic teams and audit colleagues see both the number and sophistication of this type of fraud increasing. Businesses need to be vigilant to the risk and protect themselves from it,” said Mr Grant.
KPMG’s forensic team in Scotland has eight staff working across its offices in Aberdeen, Edinburgh and Glasgow, helping clients deal with fraud and misconduct issues. They apply investigative, accounting and technology skills to find the facts and they use their experience of investigating dozens of frauds across Scotland to help companies and public bodies put in place the controls to prevent fraud or detect it quickly.