Fraud in Germany: the financial crime that needs a 21st century fraud response plan

Written by Mary Munford on Thursday September 8, 2016

We don’t know who originally had the idea for committing financial crime, although what is said to be the first recorded incident of fraud – involving a Greek merchant called Hegestratos, an upfront payment for transporting a cargo of corn and a failed plan to scuttle the ship carrying it – dates back to around 300 BC.

Things have become a bit more sophisticated since then, not least because of new technology and the scope it offers for cyber-enabled fraud. Research published earlier this year by KPMG found that technology was a key enabler for almost a quarter of fraudsters and cyber-enabled fraud was ‘emerging as a growing threat’.

But whatever tools are used – from a multi-million dollar email scam to the old-fashioned technique of bouncing cheques – and whatever the fraudster’s motives for committing fraud may be, the threat to individuals and organisations is ever-present and the issue is rarely out of the headlines, in Germany or around the world.

A quick Internet trawl produces a string of high-profile fraud-related stories, just from the last month or so. In the UK, the Serious Fraud Office (SFO) announced on 8 August that it had opened a criminal investigation into civil aviation giant Airbus Group – whose global presence includes a number of businesses in Germany – ‘into allegations of fraud, bribery and corruption…[that] relate to irregularities concerning third party consultants’. Airbus says it ‘continues to cooperate with the SFO’.

Around the world, card not present fraud in Australia was reported to have shot up by 13% to AUS$226.3 million in 2015, Egypt is caught up in a wheat procurement scandal and the death has been announced of Lou Pearlman. Famous as the man behind boy bands Backstreet Boys and NSYNC, he was also serving a 25-year jail sentence for a £300 million Ponzi fraud when he died.

The picture in Germany

Let’s go back to Germany, and take a closer look at the fraud landscape there. Days after the Airbus announcement, Nuremburg-based Leoni, the global wires, cables and wiring systems specialist, announced that fraudsters had used ‘falsified documents and identifies and the use of electronic communications channels’ to transfer around €40 million of the company’s money into overseas accounts.

And earlier this year, Germany’s healthcare system was said to be losing around €1 billion a year through healthcare billing scams, including links to Russian organised crime.

So those are some of the fraud stories hitting the German headlines, as they always will where big names and big numbers are involved. What do the crime statistics have to say?

Fraud statistics

Earlier this year, the Bundeskriminalamt, the Federal Criminal Police Office or BKA, released its 2015 Police Crime Statistics,  ,which revealed that fraud cases had actually fallen from their 2014 levels.

Granted, the overall drop was only 0.3%, to a total of 966,326 recorded cases, but there were also some more impressive reductions. Fraud typologies where cases fell included using unlawfully obtained payment card data, down by 15.5% and using unlawfully obtained credit cards, down by 3.8%.

The percentage of recorded fraud offences cleared up was also high, at just over 76% for both 2014 and 2015, much higher than the rate for crime overall of 56.3%.

That all sounds pretty positive, but it’s also worth bearing in mind that fraud represented a pretty big chunk – just over 15% – of the 6,330,649 offences featured in the report, and was the third most common type of crime, behind theft and street crime.

Computer crime – which includes computer fraud and fraud with unlawfully obtained debit cards with a PIN – also fell by 5.2% to just over 70,000 recorded offences, though the BKA said this could be due to a change in the way cybercrime offences are recorded, which was introduced in 2014.

What is likely to be a concern here is the low clear-up rate for this type of offence – less than half that for fraud offences at only 31.9%.

Fraud and business

Earlier this year, KPMG highlighted a study it had carried out about how computer criminality was affecting German businesses. It found that 40% of respondents had been affected by cyber-enabled crime in the last two years; 89% though the risk of attack was high to very high and 70% thought it would increase over the next two years.

It also reported ‘a sharp increase’ in Germany of so-called fake president fraud or CEO fraud. Here, fraudsters use authentic-looking emails to trick individuals within a company into thinking they have been contacted by the most senior people in their company, instructing them to secretly transfer money – often very large sums – to a foreign account.

What about fraud more generally in the business world? According to a 2015 EY fraud survey: ‘High-profile cases of financial misstatement and criminal investigations into accounting regularities do not appear to have resulted in any reduction in the risks of fraud…the risks of fraud, bribery and corruption are not going away’.

And it had a stark warning that in a highly competitive marketplace, ‘growth through corruption or fraud may seem the quickest option’.

However, there were positive findings from Germany in the report, which questioned employees in large companies in 38 countries in Europe, the Middle East, India and Africa: when it came to perceptions about whether bribery/corrupt practices happen widely in their country, only 26% of German respondents thought that was the case, way below the 51% average for all countries.

And when asked whether they had heard of fraud or bribery in their business over the last 12 months, just 11% of German respondents said yes, compared with an all-country average of 21% and a high of 99% in Oman.

Combating fraud

If fraud has been around since 300BC, it’s a fair chance it will still be with us in 2300 or even 3300: it will just have evolved alongside the ways we live and work and the technology we use. But with some stark warnings about the cost of cyber-enabled fraud and other cybercrime alone – predicted to hit $2.1 trillion globally by 2019 – organisations cannot afford to leave fraud risks out of their strategic planning. Developing an anti-fraud culture, to protect against fraud happening in the first place, and fraud response plans, in the event that it does, are crucial.

We’ve recognised the importance of fraud risk management with the ICA Advanced Certificate in Managing Fraud, an intermediate level course aimed at current practitioners and those new to the field, which focuses on understanding fraud threats, preventing them from occurring and managing the response when they do. To find out more about this course, or our other qualifications focusing on financial crime prevention, risk and compliance and anti money laundering, why not register for one of our free information sessions, which we are holding in locations worldwide?

If you would like to find out more about ICA qualifications, we’re running a series of free information sessions at locations around the world in 2016, so why not book your place to find out how studying with the ICA could help enhance your career?

To stay updated on the latest developments in governance, risk and compliance, anti money laundering and financial crime prevention, please follow us on LinkedInFacebookand Twitter, where you are guaranteed to be notified when our next blog post goes live.

For more information on the full range of ICA qualifications,

please visit our qualifications page



Please leave a comment

You can leave the name empty should you wish to remain Anonymous.

You are replying to post:



Email *

Comment *

Search posts

View posts by Author