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Portrait of a Typical Fraudster Painted in KPMG Study


Portrait of a Typical Fraudster Painted in KPMG Study

Male senior managers between 36 and 45 with more than ten years of tenure topped the typical fraudster list.

As an employer, wouldn’t you love to know whether or not an employee is going to commit fraud? As nice as it would be to have “x-ray fraud vision”, identifying workplace fraudsters can be difficult. Luckily, KPMG released a report titled “Who is the Typical Fraudster?” based on 348 actual fraud investigations that were carried out by KPMG member firms in 69 countries.

If employees don’t have guidance when facing difficult ethical decisions they’re more likely to commit fraud.

Download this free checklist to start creating a workplace where employees act ethically and, in turn, avoid fraudulent behavior.


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Who is the "Typical Fraudster"?

Drawing on the profiles of those involved in the 348 fraud investigations analyzed by KPMG for the report, here’s a list of characteristics they discovered about the typical fraudster:

  • Male
  • 36-45 years old
  • Commits fraud against his own employer
  • Works in the finance function or in a finance-related role
  • Holds a senior management position
  • Employed by the company for more than 10 years
  • Works in collusion with another perpetrator

It's clear from the findings that fraud can be committed by those you least expect - senior employees in long-term positions.

RELATED: Detecting and Preventing Employee Theft: The Ultimate Guide

What Motivates Fraudsters?

Another element the report looked at was motivation for committing fraud. The report found that personal financial gain remains the number one push for individuals to commit fraud, noting:

Attempts to conceal losses or poor performance (possibly due to pressures to meet budgets and targets, to enhance bonuses or to safeguard against loss of employment) provide motivation for many frauds, notably those involving the misreporting of results.

These findings make a lot of sense, as employees feared job loss during the recent economic recession. However, committing fraud is no way to secure your job.

On a positive note, the report found that less fraud occurs in organizations that incorporate zero tolerance for fraud into the company’s corporate culture. Fraud levels also tend to be lower in companies where realistic, achievable goals are established for employees.

Read the Signs

The report noted that 56% of fraud cases analyzed were preceded by a red flag – a warning sign that something wasn’t right. In 2011, only 6% of initial red flags were acted on, down from 24% in 2007.

This statistic is alarming, since ignoring warning signs and employee complaints about alleged fraud can result in ongoing fraud, which leads to greater losses to the organization. And the longer the typical fraudster gets away with their scheme, the more likely it is that other employees will engage in fraudulent activity because they don’t think they’ll get caught.

KPMG reported that in the cases they analyzed for the report, it took roughly three and a half years from fraud inception to detection. These findings communicate to us that employers need to be more responsive to the warning signs of fraud in order to reduce the impact it has on the organization.

Want to boost your fraud detection and prevention efforts? Watch this free webinar on insider threats from financial crime expert Michael Schidlow.