FRAUD is possibly one of the oldest professions – recorded instances date back to earlier than 400BC when gold was coated with pottery to enable it to be smuggled past toll-gates in China.
Since then, fraud of every type has evolved into a global industry of mammoth proportions taking funds away from often vital services.
The National Fraud Authority's Annual Fraud Indicator 2012 estimated losses at over £70 billion in the UK alone, a staggering amount of money. All too often, the frauds are not the one-off "get rich quick" ones that make exciting film material.
They are low level/high volume/ just under the radar frauds that can go on undetected for years.
There is also a growing trend to the more "traditional" frauds, especially as organisations shrink creating greater opportunity for fraud through the lack of segregation of duties and prevention controls as focus moves ever more to saving money and achieving targets.
There is no mystery to fraud or bribery and the Fraud Act 2006 and the Bribery Act 2010 have gone a long way to provide clarity making life easier for investigators, prosecutors and jurors (a distinct improvement from the over-complex and tired legislation the Acts replace).
The Fraud Act distils fraud into three main offences: Fraud by False Representation (I tell you a lie – you give me money) which can be verbal, written, via web-sites or simply implied; Fraud by Failure to Disclose (where there is a legal duty to do so); and Fraud by Abuse of Position (being in position of trust and gaining an advantage or making someone suffer a loss) through being in such a position.
In addition to giving (or offering), accepting (or requesting) a bribe, under the Bribery Act it is a specific offence (to prevent "facilitation" payments) to bribe a Foreign Public Official, plus there is a corporate offence of Failing to Prevent Bribery.
The old adage "prevention is better than a cure" certainly resonates in the fraud arena and there are a number of steps that should be taken to move an organisation's anti-fraud capability and response to one of "action" rather than "reaction". Rather than waiting for an incident to occur, steps should be taken to understand the nature and scale of risks and then develop a strategy, supported by a robust policy and controls framework to support it.
Where fraud is discovered, it should be professionally investigated and all sanctions (criminal, civil, disciplinary and regularity) considered.
Tip of the week:
It is vital that you consider speaking to an experienced and specialist Fraud and Risk Advisor to help identify vulnerable areas and provide guidance on the necessary steps required to protect your organisation from potential fraud and security threats.