A business’s biggest risk to fraud is itself, according to a new report detailing major vulnerabilities in the capital’s financial sector.
The research, published by accountants RSM, revealed that UK firms lost “at least” £40 million last year from fraud perpetrated by their own employees.
Around £7 million of such was concentrated around the Greater London region – the majority defrauded from London accountants.
The City of London followed close behind, with £4.7 million of employee-related losses.
Combined, the capital accounted for some 29 per cent of losses from employee fraud, with a reported £338,380 average loss.
Cifas, a fraud prevention body, said the number of cases of fraud has risen over the last decade. The most common form of fraud is cash theft, accounting for more than 20 per cent of cases. This is followed by manipulation of third-party accounts held by friends or families.
Akhlaq Ahmed, forensic partner at RSM, said: “The levels of reported employee fraud and the resulting losses are already high, but this is likely to be the tip of the iceberg. Sadly, a great deal of employee fraud goes unnoticed and unreported, and businesses are simply not doing enough to prevent losses.
“In our experience, fraud is often carried out by employees who may have been in post for some time and who know where the weak points are. They can often be motivated by greed, lifestyle aspirations, debts or addictions.”
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