Fraud Trends & Protection in Anti-Money Laundering - Key Insights
Covering fraud trends, protection, and anti-money laundering changes, including typical red flags, unchanged patterns, and evolving risks. Explore the challenges and strategies in combating financial crimes.
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Presentation Transcript
Fraud Trends & Protection and Anti-Money Laundering 12 March 2017 Karen Lowe
Introductions What will we be covering? Fraud trends & protection Anti-money laundering changes (Easy) questions welcomed
FRAUD What s new and what s unchanged ? http://t0.gstatic.com/images?q=tbn:ANd9GcS8jnxrjaGfW6jpwE_2eHGykN7dnhp0m9cM7fpZywiH4qaR3q3-og
http://3.bp.blogspot.com/-2_MJAvF-Y5Y/TiKAQDVmhsI/AAAAAAAAAVI/xp8ZrPsmvfw/s760/fraudster.jpghttp://3.bp.blogspot.com/-2_MJAvF-Y5Y/TiKAQDVmhsI/AAAAAAAAAVI/xp8ZrPsmvfw/s760/fraudster.jpg TYPICAL FRAUDSTER Knows the controls Knows how to operate below detection rates Knows when the fraud prevention controls start Knows the weaknesses in those controls Has worked for your organisation for at least 4 years Reasonably intelligent (at first !) Has his / her own rationale and motivation for committing fraud
WHAT ELSE HASNT CHANGED ? Supplier bank account changes Chief Exec emails for money transfers Expenses frauds Procurement fraud / bribery & corruption
SAME OLD RED FLAGS http://t1.gstatic.com/images?q=tbn:ANd9GcRkuu5YpmDYj4OfmlnsBr7yxvVfM_I9xd_l_YV-AX1CYKkOWiD1RQ Lifestyle changes Bullies or well-thought of No holidays or sickness Overly helpful / extremely unhelpful in audits High vacancies / stretched staff Manual controls
SO WHAT IS CHANGING ?
.IS NOW FIRMLY A SQUARE 4th angle is capability not everyone is a born fraudster, thankfully !
WHAT ARE WE SEEING MORE OF ? Theft of information (via hackers or internally) http://cached.imagescaler.hbpl.co.uk/resize/scaleWidth/216/?sURL=http://offlinehbpl.hbpl.co.uk/News/OTM/94F294A9-07F1-5FCB-C27FF415FC343852.jpg Theft of assets Partnerships over-invoicing http://www.cricpa.com/Fraudster.jpg Corruption in procurement processes
WHAT ELSE IS HAPPENING? Gaps in assurance frameworks No investment in automated controls Controls stripped out at the point of the risk first entering the process More with less = difficult = fraud opportunities
TYPICAL FRAUD RISKS AND CONTROLS SCENARIO Fraud Risks Supplier Payments process Controls Missing controls Weak controls Bureaucracy
HELP ! COSO Fraud Risk Management Guide 5 key principles Communicate fraud risk management programme Fraud risk assessments Prevention and detection Communication and corrective actions Continuous review & evaluation
HELP ! CHEAPER / EASIER OPTIONS Work to within the fraud risk appetite Who else is an assurance provider IT to check automated controls Top slice inherent fraud risk areas Shared learnings eg MAG Health checks when others suffer Don t forget cheap deterrent controls
HELP ! OTHER OPTIONS Get in first, input to design of fraud controls Push heavily for segregation of duties, automated controls and user profiles Data analytics / predictive analysis to run matches and report exceptions automatically Forensic specialist and suck them dry !
QUESTIONS TO ASK WHEN BACK AT WORK Is fraud on your corporate risk register ? Is there a defined risk appetite ? When was it last reviewed ? Has fraud tolerance levels changed ? Do we need to treat fraud risks, or can we transfer or tolerate ? Given next year s EU data protection laws, are we well prepared ?
EU ANTI-MONEY LAUNDERING Applicable if any joint ventures <50% public ownership New EU 4th Directive AML June 2017 Document risk based approach Can t automatically do SDD Include domestic PEPS On-going monitoring
Any questions ? Thankyou and safe journey home
