Fraud committed by employees rises due to Covid-19

25 March 2022 3 min. read
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Employee fraud jumped by 45 cases in 2021, according to a new report. Researchers believe the rise was due to Covid-19 providing more opportunities for the behaviour, as companies continued to rush out home-working initiatives.

Roy Waligora, Head of UK investigations at KPMG, said, “Covid-19 has changed so many aspects of our working lives. As organisations have had to make changes to adapt to economic uncertainty and hybrid working, many employees may feel a mixture of reluctance and anxiety about being forced to perform their job in a certain way to comply with new measures.”

According to the KPMG Partner, this anxiety, mixed with economic uncertainty, has been a leading motivation for some employees to commit fraud. By KPMG’s reckoning, the number of fraud acts committed by UK employees spiked from 44 in 2020, to 66 in 2021.

Change in total volume and value of cases recorded

“Those working from home may even think that they have a lower chance of being caught because they are out of sight of their employer and are willing to risk it,” Waligora added.

More broadly, the number of fraud cases of all kinds in the UK fell during the initial year of the pandemic – but as people became accustomed to working remotely, they may have had more time to weigh up how to exploit the opportunities it provided. This saw a jump of more than 100 extra cases. Even though the rise is alarming, however, it is also worth noting that the value of these fraud acts has fallen to its lowest rate since KPMG’s UK Fraud Barometer adopted its current tracking methodology in 2017.

KPMG actually recorded fewer cases of fraud in 2017 than it did now. However, the total haul of funds involved cleared £3 billion. In stark contrast, the more-than-300 fraud cases analysed in 2021 accounted for under £500 million – suggesting levels of desperation amid the pandemic are seeing individuals willing to risk breaking the law for substantially less money. With a cost-of-living crisis tightening its grip in the UK, firms might well expect the number of fraud acts to spike further in the coming year; though similarly the amount of funds lost in this way may not rise.

Fraud volumes by perpetrator

Perhaps more notably, though, the rate at which management commits acts of fraud seems to be growing even more rapidly. Management members were involved in almost an identical number of fraud cases in 2021 – but rose from a much lower base number in 2020, of around 20 compared to around 40 employee cases.

If this trend continues, the financial toll on companies could be much higher. Managers have access to higher-level information, and are trusted with access to more sensitive data. With embezzlement already the most common form of fraud in KPMG’s research – at over 50 cases – this could see far greater sums of money lost in 2022, if the rate of managerial fraud continues to rise.

Either way, though, while employee or management fraud might make headlines more due to the betrayal of trust involved, they are still comparatively rare. The most common fraudsters remain professional criminals – and the volume connected to those perpetrators almost doubled in 2021.