Counter Fraud

Fraud

Below and on the additional pages in the side bar menu is an introduction to Fraud with businesses.  This may be useful if you are new to recruiting in this area.

All organisations are subject to fraud risk. Large frauds have led to the downfall of large conglomerates, massive investment losses, significant legal costs and erosion of confidence in capital markets. Publicised fraudulent activity by key personnel has negatively impacted the reputations, brands and images of many organisations.

Reactions to recent corporate scandals have raised public and stakeholder expectations on fraud policy. A consistent process for conducting investigations can help an organisation mitigate losses and manage risk associated with the investigation.

Different Types of Fraud:

• Bribery and corruption
• Business ethics and fraud
• Cybercrime
• Fraud risk management

Bribery and corruption

On 1 July 2011 all of the UK’s existing law on domestic and foreign bribery was replaced by the Bribery Act 2010.

The new Act creates four new criminal offences: bribing, being bribed, bribing a foreign public official, and a corporate offence when a commercial organisation has failed to prevent bribery being carried out on its behalf by a person associated with it.

The new regime imposes serious sanctions (financial and custodial), and businesses need to take steps to ensure they do not fall foul of its wide-ranging powers. The Ministry of Justice has published guidance on the Act (based around six principles) to help organisations understand the legislation, deal with the risks of bribery and design their ‘adequate procedures'. The six principles are:

• Proportionate procedures
• Top-level commitment
• Risk assessment
• Due diligence
• Communication (and training)
• Monitoring and review.

Business ethics and fraud

Ethical behaviour is the best defence against fraud. Nine steps to becoming a more ethical organisation are:

Define honest behaviour: It should not be assumed that every employee has identical notions of right and wrong. Senior executives should set and communicate clear minimum standards. Drawing lines on matters such as expenses and internal reporting will be respected by the honest majority, warn off others and make it easier to identify problems at an early stage. 

Review rewards: Pay and bonus policies can incentivise staff to disregard or take account of ethical considerations. Leaders must identify the impact of different remuneration methods and use the information to recalibrate the targets they set. Rewarding staff for building customer loyalty (and the further sales which flow from an emphasis on customer service) is one way in which pay and bonuses can be used to encourage ethical behaviour.

No blame policies: Ethical behaviour thrives when people are unafraid to voice their concerns. No news may not be good news. A ‘no blame’ culture allows staff to admit mistakes without fear of retribution.  

Promote fairness: The positive effect of being treated fairly cannot be underestimated. Businesses should adopt a systematic approach to treating customers and co-workers fairly.

Introduce a code of ethics: This should emphasise the need for personal responsibility. Codes require clarity, brevity and unambiguous principles. One of the greatest benefits of devising a code is that it can raise awareness and stimulate fresh thinking about how both individuals and organisations should work. The final product will be more effective if staff are genuinely involved in the process. 

Train staff: Ethical issues arise in almost every aspect of organisational life and should be common to most training modules. This will combat the widespread assumption that ethics are a kind of ‘specialist subject’ rather than an essential part of every employee’s toolbox. Set aside time for staff to discuss how lessons may be applied in their own roles. Principles will be better understood if illustrated with relevant real life case studies. Regular and prominent internal publicity promoting the provisions of a code are vital.

Report fraud: Disclosing fraud to regulators, investors, benefactors and staff need not be a negative experience and can result in strong support, understanding and assistance.

Protect whistleblowers: The legal protection provided by the Public Interest Disclosure Act 1998 has not prevented many whistleblowers suffering for their actions. Encourage staff to voice their concerns without fear of reprisal.

A sense of honour: Some of the most effective organisations are motivated by more than a desire to hit targets. Executives and employers want to feel proud of what they do because they judge themselves by more than material criteria. How they get the results is as important as the results they get.

Cybercrime

Cybercrime is now the second largest threat to the UK after terrorism. Intellectual property theft and industrial espionage are the biggest areas of loss – business is the biggest victim.

Some practical steps to help secure your business against cybercrime are:

• Write an IT security plan for your business. Aim for something that delivers benefits quickly – you can perfect it later. Don’t neglect physical security for systems and data.
• Control internal access to critical information and review access privileges regularly.
• Staff use of memory sticks, WiFi and smart phones all present exceptional security risks in the workplace. Consider an outright ban, or at the very least implement strict controls.
• Use secure encryption to protect information travelling over the public internet. Strictly control and review remote access to the corporate network.
• Train all staff in the principles and best practice of IT and data security. Make it part of induction and underscore personal responsibilities.
• Write good staff policies to cover the use of the internet (including private use), email systems (including webmail), passwords, laptops and portable devices, personal software, sharing and downloading copyright material, and details of monitoring procedures. Explain what happens when these rules are breached.
• Cut ‘cyberslacking’. Monitor internet use, install internet content filters, restrict access to browsers and email, and strictly control software installations.

Roles and Areas within Fraud:

Banking and finance

• Financial Crime Investigators
• Fraud Analysts
• Anti-money laundering (AML) Officers
• Fraud Managers
• Head of Fraud Prevention

Insurance

• Fraudulent Claims Handlers
• Field Investigators
• Fraud Investigators
• Property and Casualty Claims Investigators
• Claims Technicians

Public sector fraud

• Benefit Fraud Investigators (PINS accredited)
• NHS Local Counter Fraud Specialists (LCFS)
• Housing Fraud & Tenancy Investigations Officers
• Council Tax Investigators
• Physical and Information Security Professionals
• Internal Auditors
• Head of Fraud Prevention

Charities

• Loss Prevention Managers
• Internal Auditors
• Fraud Specialists
• Compliance Managers
• AML Investigator

Payments

• Fraud Analysts
• Fraud and Risk Manager
• Investigator
• Head of AML
• Fraud Analyst Team Manager
• Information Security Consultants

Online gaming

• Fraud Analyst
• Bi-lingual Fraud Specialists
• Compliance Manager
• AML Investigator
• Information Security Analyst
• Head of Fraud and Payments

Retail and eTail

• Loss Prevention Managers
• Loss Prevention Officer
• Internal Auditors
• Fraud Specialists
• Compliance Managers
• AML Investigator
• Head of Fraud

Technology

• Pre-Sales Consultant
• Business Intelligence Manager
• PCI DSS Consultant
• Information Security Analyst
• Information Security Consultant

Forensic Accountancy

• Economic crime investigation professionals in the public sector
• Forensic accountants
• Insolvency practitioners with financial crime experience
• Financial investigators
• Computer and telecommunication forensic practitioners with financial investigation work experience