Scottish fraud increased by 80 per cent in 2015

Across the whole of the UK the latest FraudTrack report, which examines all cases of reported fraud cases over £50,000, found that the total value of fraud increased by 110 per cent from £720 to £1.5 billion.

In Scotland the highest value reported fraud for £6m was in Dundee and involved a money laundering scam known as “cuckoo smurfing”. This involves replacing legitimate cash intended for bank transfers overseas with so called “dirty” money. The cuckoo element refers to the depositing of funds in the accounts of unsuspecting individuals.

The second highest value reported fraud of £4m involved Glasgow convenience store operator Mohammed Ameen Mirza who ran Nisa outlets in Cambuslang, the Gorbals and Haghill. He was charged with fraudulently evading VAT by failing to declare earnings and police found £900,000 in cash at his home and premises.

By far the largest number of frauds in Scotland involved theft and cash which accounted for 42 per cent of all frauds during 2015. This is the most common form of fraud and among the simplest since it usually entails a trusted employee exploiting their position to transfer funds or goods to accounts operated by them.

In one example from 2015 an NHS worker stole £1.3m worth of medical equipment which he then sold for personal gain. Another example involved an assistant in an accountancy firm who handled charity clients and who transferred £726,000 from trusts established to help charities to other accounts which she benefited from.

Sat Plaha, head of regional forensic services with BDO, said: “The jump in the value of reported fraud in Scotland is skewed by the £6m value of the “cuckoo smurfing” case but clearly fraud remains a major issue for Scottish business.

“Theft and cash fraud is by far the most common method of defrauding a business. This is because many businesses simply do not have sufficient checks and balances within their operation to ensure that trusted employees cannot exploit loopholes. The problem is that individuals will always be placed in positions of trust it just depends whether they decide to use that position for their own gain.”

The reasons for fraudulent behaviour are almost always greed and to fund a lavish lifestyle. These reasons accounted for 67.80 per cent of all frauds followed by gambling which made up 14.58 per cent of fraud and then debt accounting for 8.14 per cent.

Mr Plaha added: “Fraud is almost always about greed. People don’t defraud others because of any particular need but simply because they identify an opportunity and then take advantage of their situation for their own gain.

“They may then develop expensive lifestyles which need to be continually funded often resulting in the fraud becoming more audacious. Without proper controls many companies may well suffer fraud for many years without noticing.

“It is essential for companies, charities and businesses to put in place systems to monitor financial transactions so that fraudsters cannot continue for years without detection.”