Profile of a fraudster 

Last year, Swiss businesses lost CHF 365 million as a result of the fraudulent activities of their employees – in Europe the average damage incurred per case amounted to USD 1 million.  KPMG investigated 348 cases of fraud in over 69 countries in a broad-based study. The copious amounts of data gathered over the course of this study made it possible to draw up an average profile of a fraudster. In addition to collecting information about offenders, the study also determined where most cases of fraud take place, what the motives were behind these activities and how fraud can be detected early.

The typical swindler
A specific profile of a fraudster was put together based on the data gathered. An average offender displays the following characteristics:

Regional differences
Most fraud-related offenses are still committed by men; however the percentage of male offenders (87%) is not the same across the board in an international comparison. Particularly in America (22%) and Asia (23%), the percentage of women cited in crime statistics is considerably higher than in Europe, the Middle East and Africa (EMA) where this figure only amounts to 8%. Among other factors, this is linked to the low proportion of women holding management positions in Europe.

Fraudsters in America collaborate with other people in 66% of the cases while offenders in the EMA region only do so 59% of the time. Collaboration is also more frequent among Swiss fraudsters as confirmed by Anne van Heerden, Head of Risk & Compliance at KPMG Switzerland: «A typical fraudster tries to transfer money from inactive accounts, for example. In order to do so, however, he often needs to collaborate with external parties or internal allies.

Single or multiple offenders?

Similar motives
While the motives for criminal activities within the company may differ, they generally display common patterns: The offenders are frequently under financial pressure as a result of an excessive lifestyle, they feel underpaid – in relation to the responsibility they bear – or they commit fraud in order to achieve their ambitious financial goals. There are also other factors that encourage fraud: weak internal controls, sufficient trust placed in the offender and sufficient freedom. Moreover, his impression that he is undercompensated or underappreciated is also a key element.

On the increase in upper management and among staff
Another conspicuous trend is that the percentage of offenders from the upper level of management (members of the executive board and the board of directors), middle management and among staff without management responsibility has increased significantly since the last survey in 2007. Only within senior management was there a considerable decline in the number of fraud cases. «In part this is connected to the fact that fraud prevention programs have been launched at the senior management level in many places. Nevertheless, this is the level where the lion’s share of fraud cases still takes place,» says Anne van Heerden.

Position within the company

Higher risk among longtime employees
The longer an employee stays in a company, the more likely he is to commit fraud. This is a conclusion also suggested by the study: 33% of all fraud-related crime is committed by employees who have been working in the company for more than ten years. Explanations for this could lie in increased trust, laxer controls and also the greater freedom afforded these employees. Compared to the results of the last survey (22%), there has been a clear increase in the percentage of longtime employees involved.

Red flags are present
There are various red flags which could indicate possible fraud. In 56% of cases, these indications are present prior to the actual fraudulent activity. However, if identified, these do not result in any consequences. This figure has increased greatly compared to the last study (45%). Possible red flags include:

Red flags and consequences (2011 vs 2007 survey)