White-collar crime - the case for caution White-collar crime - the case for caution

As the recently published KPMG Forensic Fraud Barometer shows, white-collar crime remains a significant source of financial loss in Switzerland. Organizations should take measures to protect their assets – and respond effectively if the worst should happen.

Every year, KPMG Switzerland reviews major cases of white-collar crime reported in various Swiss media outlets and sets out the findings in the KPMG Forensic Fraud Barometer. The 2020 edition of the KPMG Forensic Fraud Barometer only included articles concerning cases of white-collar crimes which were tried by Swiss courts and involved losses in excess of CHF 50,000. There were 52 such cases last year, accounting for total damages of CHF 355 million. Although this represents a slight decrease on the prior year (2019: CHF 363 million), it is still more than double the level of 2018 (CHF 166 million). Experience shows that many cases are never even reported, so the actual figures for white collar crime are likely to be several times higher.

The KPMG Forensic Fraud Barometer found disloyal management and embezzlement (ten cases each) to be the most frequently reported white-collar crimes in 2020, accounting for more than 40 percent of the losses analyzed by KPMG. However, white-collar crime is a much more wide-ranging issue, and also includes bribery, scams, money laundering, misappropriation, financial statement fraud, corruption, infringements of competition/antitrust laws, economic espionage and tax, social security, insurance or investment fraud. And while many may instinctively imagine repeat offenders like systematic "professional" fraudsters or organized criminals to be behind white-collar crime, KPMG found private individuals (13 out of 52 cases) to be the second most common perpetrator after professional fraudsters (19 our of 52 cases) in 2020. Management and, to a lesser extent, employees were also involved in a significant number of cases. In terms of Victims, KPMG’s study found public institutions (20 of 52 cases) to be affected most often by white-collar crime in 2020, with most other cases relating to private individuals (12 of 52 cases), commercial enterprises (10 of 52 cases) and customers (8 of 52 cases). These findings show that the threat of white-collar crime takes many guises, and affects all stakeholders in society. With this in mind, it’s all the more important that companies take steps not only to protect their assets but also to develop "trust".

Results from the KPMG Forensic Fraud Barometer are based on a review of court cases tried in public and reported in the media over the course of the year. As it can take many years for offenses to come to light, be investigated and be tried in the courts, the current level of white-collar crime activity will only become apparent over time. It will be interesting to see how the effects of the pandemic are reflected in future periods. After all, COVID-19 has created previously unthinkable consequences for our society. Organized crime has been quick to respond, mounting large-scale orchestrated campaigns to defraud banking customers, and preying on fear and anxiety related to COVID-19. At the same time, new ways of working, a focus on survival over regular controls, and a shift to increasingly digital and remote daily business can expose companies to new risks. For example, fraudsters could attempt to intercept data or listen in on confidential – digital – meetings or emails. There have also been cases where employees were tricked into revealing remote login credentials through a bogus request to log into a new COVID-19 portal. Once an employee has entered their details, the fraudster has unfettered access to the employee’s company accounts and the organization’s network. Get further insights in our factsheet: COVID-19 - beware of frauds & scamps.

The results of the KPMG Forensic Fraud Barometer show that white-collar crime in Switzerland remains a significant risk. Organizations should ensure that they have in place systems and controls to protect their assets from fraudulent activity. Where relevant, employees should receive anti-bribery, anti-money laundering and anti-corruption training as a matter of course. An experienced advisor like KPMG can support organizations in developing measures and ensuring they are implemented effectively throughout the organization.

As white-collar crime comes in many forms and remains a threat even at the best-prepared organizations, it’s also important to define protocols of how to respond if the worst should happen and a suspected case of fraud comes to light. While prevention is the best strategy, the right response can limit the impact of any incidents on a company’s reputation, and help retain public trust in the market. Quickly engaging an independent expert like KPMG Forensic to conduct an in-house investigation can help in identifying the perpetrators, quantifying damage, allocating responsibilities and, if possible, recovering assets. It also sends a signal to all stakeholders that white-collar crime is not tolerated, and enables transparent communication based on verified facts.

In our current environment of uncertainty and change, organizations need to be particularly vigilant to the risks of white-collar crime. At the same time, disruption to working and business models can be a good opportunity for companies to reassess their risk frameworks in general, including internal and external threats of white-collar crime.

Discover further findings in KPMG's Forensic Fraud Barometer.