Payment interception by male internal staff in non-management positions represents the biggest risk of fraud for superannuation funds, KPMG’s biennial fraud survey has revealed.

The profile was created from a survey of 281 financial services organisations who had detected $372.7m worth of fraud in the last two years.

Three quarters of this fraud was committed by internal staff, with male staff members being three times more likely to be the perpetrators than female staff.

Of those detected, 91 per cent of fraudsters had no known history of fraud, while 49 per cent were in non-management positions, 19 per cent were in management positions, 7 per cent were executives and 25 per cent were external to the organisation.

The biggest trend in the survey was the growth in lifestyle as the motivation for fraud. In 2010 this was cited as the cause of fraud in only 3 per cent of cases, but grew to 37 per cent in 2012. KPMG interpreted this as being caused by the “lag effect” of the global financial crisis on individuals’ finances.

Majella Foyle, a manager at KPMG, said the major cause of fraud for superannuation schemes was the interception of contributions from employers to funds and from funds to banks, fund managers and custodians.

The biggest risks she identified as coming from manual processes, from dormant accounts, from bogus refunds and from transfers to SMSFs.

Foyle said the respondents to the survey were recognising the importance of training employees to recognise the warning signs of fraud and to provide them with the avenues and mechanisms to report these red flags when they see them.

Day 2 newsletter from CMSF 2013
Day 1 newsletter from CMSF 2013

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