Prevention is key as organisations worldwide observe Fraud Week
Date: 13 Nov 2017 By: CRI Group

Every year, for one week in November, organisations around the world embrace a movement aimed to minimize and prevent fraud and corruption. International Fraud Awareness Week (“Fraud Week,” for short) is November 12-18, 2017, and CRI Group has been an enthusiastic Official Supporter since the very beginning of this important campaign.

According to the ACFE, the world’s largest anti-fraud association and founder of Fraud Week, organizations worldwide lose an estimated 5 percent of their annual revenues to fraud. To make things worse: “A single instance of fraud can be devastating: the median loss per fraud case was $145,000, and more than a fifth of the cases involved losses of at least $1 million.”

But there is good news. For Fraud Week, the ACFE offers some basic steps any organisation can take immediately to lessen their vulnerability to fraud:

  • Be Proactive. Adopt a code of ethics for management and employees. Evaluate your internal controls for effectiveness and identify areas of the business that are vulnerable to fraud.
  • Establish Hiring Procedures. When hiring staff, conduct thorough background investigations. Check educational, credit and employment history (as permitted by law), as well as references.
  • Train Employees in Fraud Prevention. Do workers know the warning signs of fraud? Ensure that staff members know basic fraud prevention techniques.
  • Implement a Fraud Hotline. Fraud is still most likely to be detected by a tip. Providing an anonymous reporting system for your employees, contractors and clients will help uncover more fraud.
  • Increase the Perception of Detection. Communicate regularly to staff about anti-fraud policies, ways to report suspicions of misconduct, and the potential consequences (including termination and prosecution) of fraudulent behavior.

At CRI Group, our experts are trained to help organisations implement the above measures. Our integrity due diligence and risk management services focus on preventing fraud before it happens, not after the fact, when it is often too late to recover stolen funds and assets.

In one case study, a multinational company engaged in the provision of equipment and supplies used by the medical industry contacted CRI Group. The client wished to contract with a company and wanted to ensure that there were no regulatory or reputational problems associated with the potential partner, and thus wanted to know their track record, integrity and reputation.

During the course of this integrity due diligence, CRI Group local operatives focused on whether the company in question was a legitimate business, and sought to identify the key players running operations both in Egypt and Iraq for the company in question. However, questions arose: Research showed no physical locations; the office address was found to be a residential site with no indication of business operations. No commercial relationships in Iraq were evident.

Local operatives further investigated the company’s distribution capabilities in the country, especially to the north and south, as claimed in a questionnaire provided to the client. Yet no information was found from any source to corroborate the company’s claims. Additionally, discreet interviews with local individuals found that no one was aware of the company.

Skepticism was confirmed, CRI Group discovered that the company’s principal was previously charged with “criminal breach of trust” and there was still a trial proceeding with regional trial courts. Three other civil damages claims against the principal were discovered, with USD $1.2 million claimed in liabilities.

CRI Group helped the client avoid becoming entangled with a fraudulent business and an alleged criminal – protecting the client from making a bad business deal that could have resulted in severe economic loss and a potentially damaged reputation.

Our CRI Certification and due diligence services can help put any organisation on the right track to being better protected and positioned to prevent and detect fraud – not just during Fraud Awareness Week, but year-round. Contact CRI Group today.