Crime gangs infiltrating financial services

Organised crime gangs are putting ‘sleepers’ into financial services companies to extract client data that can be used for fraud.

KPMG forensic partner Garry Gill said the move, where the gang will pay for the education of a person and help them secure a job in a financial services company, is becoming more common in the UK.

“The ‘sleeper’ will work in the company for a number of years before passing on sensitive client data to the gang, which will then use it to rob clients’ accounts,” he told Money Management.

“It is getting to be a significant occurrence in the UK, and it will be no surprise if it is happening here.”

Gill said while the banks are the obvious targets for such moves, fund managers and financial planning firms will also be targets.

“When it comes to staff looking at client accounts, the use of technology has made this much easier,” he said.

“With more automation in financial services, there has been a loss of control of who can access accounts.”

Gill said many companies now have an alert system for when a staff member is looking at accounts outside their normal working area.

“The problem is a lot of alerts are generated and companies are not always following up to see if the person is accessing them too often,” he said.

“If the company doesn’t follow up alerts, staff then know that they can get away with accessing any account and the chances of data being stolen increases.”

Gill recently visited the UK and the US looking at the latest trends in fraud as part of research for the 2006 KPMG Fraud Survey.

“Fraud in the financial services industry is on the increase, especially by internal staff working with someone outside the company,” he said.

“This involves passing on confidential client details to enable false documents to be produced to access accounts.”

Gill said recently in Australia confidential data was passed outside a financial services company and two hours later false documents were used to rob a client’s account.

“The amazing thing was the speed at which the documents were produced,” he said.

According to the KPMG survey, which looked at all Australian business sectors, the incidence of fraud has doubled in the last two years.

In 2004, there were 27,657 incidences of fraud in Australian companies, but this rose to 65,000 in 2006.

Out of the 465 companies surveyed by KPMG, 47 per cent had experienced at least one fraud case in the two-year period covering 2004 to 2006.

The average value of the fraud was $714,000, but eight companies reported cases where the value exceeded $4 million. And in 42 per cent of major fraud cases, none of the stolen monies or goods were recovered.

Reasons behind a person committing fraud were usually greed and lifestyle goals, however, gambling drove 22 per cent of cases, which averaged $300,000 per incident.

The survey found the typical fraudster was a non-management employee who had worked for the organisation for at least five years. Typically, they were male, aged 38 years, acting alone and motivated by greed. The average amount stolen was $220,000 and it normally took a company 12 months to detect the fraud.

Gill said for Australian financial services companies, the big issue facing them in the future would be identity fraud carried out by internal staff.