Fraud in the financial services industry now accounts for half of all the reported fraud in the UK by value, and over a quarter of the reported cases, as increased regulations and compliance drive greater transparency, according to research by BDO.

The firm's FraudTrack survey shows that the total amount of fraud fell from £1.37bn in 2012 to £1.05bn in 2013. In contrast, the total value of financial services fraud rose from £473m to £532m, and the number of frauds in the sector went up from 122 to 132.

Kaley Crossthwaite, head of fraud at BDO, said: 'We firmly believe that the ever increasing regulatory and compliance burden imposed on financial services firms by the FCA and PRA means that fraud which historically may not have been reported, but rather dealt with privately in-house, is now coming out driven by a growing demand for transparency.'

BDO's research also shows a surge in the value of reported cases of money laundering in the UK, up by 309% from £70m in 2012 to £288m last year. The number of cases rose from 33 to 39 and included £170m laundered through a bureau de change in Notting Hill in London; £52m laundered by a courier in the East Midlands; and £20m laundered as part of a bogus marriage scam ring in London.

Crossthwaite said: 'The laundering of ill-gotten gains is largely carried out through the financial services sector and the increased legislation and compliance imposed on largely unsuspecting businesses operating in this sector seem to be uncovering increasing numbers of illegal transactions that may have historically been swept under the carpet.'

Overall, the 2013 FraudTrack report shows that while the number of cases recorded continued to increase from 413 in 2011 to 416 in 2012 and 525 in 2013, the average value of frauds has continued to fall from £5.1m in 2011 to £3.3m in 2012 and £2m in 2013.

Money laundering accounts for 27% of all fraud activity, followed by third party fraud (20%), unauthorised use or misuse of assets (14%) and tax fraud (13.5%). Employee fraud, corruption and mortgage fraud each account for around 7% of the total.

Crossthwaite said: 'The consensus view is that fraud is increasing, but it is always very difficult to quantify given the general lack of reporting of fraud across different sectors in the UK. Unless it is easy to quantify and explain in court, many frauds do not get brought to trial.'