Our recent poll reveals an alarming gap between concern and action regarding fraud. While nearly half (48%) of the 258 surveyed compliance professionals across the UK, Europe, North America, and other key regions consider fraud a high concern, 38% of their organisations haven’t planned any fraud prevention training.
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Preventing fraud and unethical business practices is a constant challenge for any organisation. The key to prevention is recognising red flags and having the necessary protocols in place to ensure business integrity. Our fraud and fair competition courses offer a comprehensive look into the critical issues surrounding fraud prevention, fair competition, and ethical business practices. The training empowers individuals and businesses alike to uphold fair competition and integrity in all aspects of their operations.
With our in-browser editing tool, you can now tailor any of the courses in real-time to reflect your organisation’s specific protocols for maintaining business integrity. Edits are clearly visible as you make them and results can easily be shared with your colleagues via a unique link.
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Our latest survey has exposed a stark reality: 44% of compliance officers and managers feel unprepared for the compliance challenges that lie ahead in 2024. Only 7% feel fully confident in tackling the challenges in the year ahead, signalling a potential industry-wide gap in readiness to address the ever-changing regulatory landscape.
The survey gathered 212 responses from industry leaders across the UK, USA, Spain and Germany, and gauged professionals’ confidence levels and preparedness in managing compliance issues. The findings underscore a critical need for robust compliance training programs as organisations navigate an increasingly complex regulatory environment.
Beyond the headline unpreparedness, the survey explored various dimensions of compliance readiness:
While 27% have implemented failure to prevent fraud training and an additional 27% are planning to do so, a concerning 46% revealed they have not yet rolled out failure to prevent fraud training, are undecided or have no plans to in the near future. This lack of preparation and preventive measures leaves businesses at an increased risk of fraudulent activities.
The new “failure to prevent fraud” offence comes into the UK as part of the Economic Crime and Corporate Transparency Act, which marks a significant shift in how businesses will be held accountable to combat corporate fraud and protect victims. Failure to provide adequate training can leave organisations susceptible to financial losses and reputational damage.
2. CSRD Compliance Preparedness
Only 2% of compliance professionals claimed to be fully prepared for Corporate Sustainability Reporting Directive (CSRD) compliance despite 50,000 companies worldwide being expected to be impacted by it. In comparison, almost half (47%) expressed uncertainty or deemed CSRD irrelevant to their operations.
As 2024 sees the first published reports from many large companies on their CSRD compliance, the global implications will ripple through supply chains, demanding a proactive approach.
In an era witnessing a quadrupling of neurodiversity discrimination cases from 2018-2022, compared to the number of cases from 2003-2017, organisations risk legal repercussions and employee well-being concerns without proactive measures for the fair treatment of neurodivergent employees to create a work environment that values and respects differences.
Despite these figures, only 8% of businesses polled incorporate neurodiversity training into their yearly programs, and a notable 28% have no plans to do so, potentially hindering the creation of an inclusive work environment and causing an escalation of neurodiversity discrimination cases.
4. Gifts and Hospitality Registers
With 2023 witnessing a nearly quarter-billion pound fine against mining giant Glencore for flying suitcases stuffed with cash to local public officials, getting a handle on gifts and hospitality is crucial for businesses to get right in 2024. Worryingly, when questioned on the types of gift registers in place, 43% of compliance professionals admitted relying on outdated spreadsheets, while 18% admitted to not using any tools for this purpose at all, despite a legal requirement to implement procedures to prevent bribery.
Given the prevalence of digital solutions, the reliance on manual tools poses a risk to accurate and comprehensive compliance tracking. Organisations should consider investing in modern systems and technologies for more efficient and accurate compliance management.
5. Internal Policies on the Role of AI
Finally, the survey explored internal policies on the role of AI. While 23% have established policies, 37% have not considered AI policies in the workplace.
As AI integration becomes more commonplace, organisations must proactively develop and update policies to ensure responsible and ethical use. Neglecting this aspect may expose organisations to legal and moral concerns.
“As the compliance landscape undergoes rapid evolution with various regulations coming into force, this survey reveals a glaring gap in preparedness among compliance professionals,” said Nick Henderson-Mayo, Director of Learning and Content at VinciWorks. “The findings emphasise the critical need for proactive compliance procedures and new initiatives, including training. There are solutions out there for busy compliance professionals, including new technologies and automation. Being prepared is half the battle, and businesses can buffet against global headwinds by investing in proactive compliance and risk mitigation.”
To support compliance professionals in understanding the compliance challenges that lie ahead, VinciWorks is offering a free guide on Compliance Trends 2024.
In a recent study carried out by VinciWorks, a global compliance eLearning provider, 212 compliance professionals were surveyed on Compliance Trends 2024.
In a major move to combat corporate fraud and protect victims, the UK government is creating a new “failure to prevent fraud” offence, marking a significant shift in how businesses will be held accountable. The legislation targets large organisations and could see them hit with hefty fines if employees commit fraud for their benefit, even if executives were unaware.
Existing powers to fine and prosecute organisations and their employees for fraud often face loopholes, allowing some companies to escape accountability. This new offence plugs those gaps and encourages a shift towards stronger internal controls.
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Under UK law, a corporation can face criminal prosecution if it fails to prevent certain actions from being undertaken by its employees, associates or even contractors. Failure to prevent encompasses a wide array of compliance failures, from not having the right policies to a lack of procedures to even ineffective training courses that don’t deliver the right information to employees.
A new failure to prevent fraud offences has been passed into law. It is a criminal offence for organisations not to have reasonable procedures in place that could have prevented that fraud.
In this webinar, VinciWorks explains what this new corporate criminal offence means, what kind of fraud is covered, and how to comply with the ‘failure to prevent’ provisions. Fortunately, failure to prevent is not a new concept in UK law. VinciWorks was at the forefront of helping companies comply with failure to prevent tax evasion and failure to prevent bribery.
Watch this free-to-attend, one-hour webinar on preparing your organisation for failure to prevent fraud.
This webinar covers:
What is Fraud Management Training?
Fraud has been increasing in recent years, especially within the business world. If an employee or a business has been found guilty of fraud following investigation, the business will be subject to severe repercussions administered in alignment with the UK Fraud Act 2006. Therefore, if a company wants to achieve an anti-fraudulent culture within their business, it would be wise to conduct fraud management training to ensure the whole organisation is aware of the fraud prevention procedures which need to be installed.
Why should an organisation conduct fraud management training?
Fraud is on the rise, especially within the business sector, where more and more expanding companies are realising that fraudulent activity has been conducted in their business on behalf of some of their employees. If your organisation is not aware of the fraud that is occurring, there is a potential for the organisation to face severe repercussions.
According to research conducted by PwC, by February 2018 half of UK organisations have been a victim of fraud in the last two years. The most severe fraud offences which affected these UK organisations amounted to the loss of over £72,000. However, it is not just the financial aspects of a fraud offence which affects an organisation, but the reputation of the organisation, which can be sufficiently damaged for allowing fraud to occur. Furthermore, employee morale will drop as there is little attraction in working for an organisation whose reputation has been tarnished and is no longer viewed as an attractive business partner to other organisations.
It is important for those who are on the management board of an organisation to commit to an anti-fraud campaign, to ensure that employees are deterred from such activity. To create a culture which deters employees from fraud, fraud management training will be beneficial.
What will fraud management training teach you?
1) This training will offer all individuals a basic understanding of what fraud is, because although we assume we know what fraud is, the many different forms it can assume can be confusing.
2) This training will identify what specific activity an organisation needs to look out for amongst its employees. If you are aware of the red flags which will highlight potentially corrupt activity, then you will have a head start in preventing this activity from occurring.
3) This training will expose and explain why employees commit fraud. If an organisation is aware of the potential reasons an employee would commit fraud, then they can aim to prevent these reasons from existing.
4) If an organisation has demonstrated that they have conducted fraud management training, then the organisation as a whole will be aware that fraud is not tolerated in their environment. Moreover, a system of trust will be established with the collective goal to prevent fraudulent activity.
KPMG, a large professional service company, has a learning academy with courses which focus upon fraud awareness for their employees to ensure they are educated within fraud and what to look out for. To conduct training such as this, the KPMG management would have to be committed to this cause as well, and their own fraud management training would demonstrate this. In May 2014 KPMG published some documentation from their “Fraud Risk Management” which had the objective of “developing a strategy for prevention, detection and response”. This is a clear indication that KPMG have established an anti-fraud culture within the business, and this will certainly deter employees and associated persons from engaging in fraudulent activity.
If you wish for your organisation to have transparent and ethical business conduct, then you should utilise fraud management training in order to establish the desired business culture for your organisation. Employees and associated people will only comply and replicate the behaviour which is around them; therefore, an example needs to be set by the management team through a demonstration of their own training.
A fraud investigation is conducted with the intention to protect and offer justice to the victim of a fraudulent offence, and in turn to punish the fraudster responsible for the offence. Fraudulent crime has been rising, and now as an attempt to deter individuals from practicing fraud, the fraud investigation process has intensified in conjunction with the repercussions. If a fraudster has committed a fraudulent offence which is of high risk, they will face potential prosecution at crown court. It is important to be aware of the fraud investigation process and the potential repercussions of fraud, which have the potential to damage an individual and a business both financially and morally.
What is the fraud investigation process?
Initially, in the UK the report of a fraudulent act will be registered with Action Fraud, the national fraud reporting centre. UK citizens are encouraged by the government to contact Action Fraud if they have a suspicion that fraudulent activity has taken place or if they believe that they might have been a victim of fraud. Following this, Action Fraud will decide which fraud reports are of significance and hold the most weight, and set into motion the fraud investigation process, which is carried out by other bodies.
The Department for Work and Pensions, HM Revenue and Customs and the relevant local authorities close to the fraud case are amongst the bodies which are involved in instigating a fraud investigation.
It needs to be decided what type of fraud has occurred because this will tailor the investigation process. Fraud can be hard to determine due to the many different forms which it can take. The most notable forms of fraud are:
Corporate Fraud
Identity Fraud
Benefit Fraud
VAT Fraud
Cyber Fraud
Following the determined type of fraud, all evidence possible will be gathered to bulk out the investigation case. Evidence can be collected through a variety of means, including background checks, surveillance checks, employee investigations and investigations of an entire business. Subsequently, the victims and potential fraudsters will be interviewed. At this stage, if a fraudster admits to the fraudulent offence, they might be issued with a warning, but this is only if the fraud offence is of low-risk.
The relevant council involved, and the Department for Work and Pensions would issue this cautionary warning. This warning would be placed on the UK National Database, but it would not be placed on a criminal record.
If a fraudster does not plead guilty at the interview stage, or their offence is too high risk to simply issue a cautionary warning or a fine, then the investigation will progress to the stage of a court hearing. The magistrates court will be used for these prosecution hearings, but if the fraudulent offence is more severe, then the crown court will be used.
In August 2018 Barnet Council conducted a fraud investigation which resulted in the sending of thirty people to a magistrate court. This was following the incriminating evidence which exposed these individuals to be using disabled parking badges, which were not their own, to allow them to park in disabled parking spots for three months. These individuals had already received warnings. Following this, they were sentenced to a court hearing.
Currently there is an expansive effort to try and crack down on fraud to deter individuals from engaging in it. The fraud investigation process and the subsequent punishments have intensified to highlight that fraud is not tolerated. Consequently, fraud awareness training and prevention is essential.
Fraud by false representation is dealt with in Section 2 of the UK Fraud Act 2006, due to the recent increase in fraudulent crimes conducted in this manner. Fraud by false representation involves an individual consciously being dishonest in their account of a certain situation in a way that gains a favourable outcome for the fraudster. It is important to understand when fraud by false representation has occurred and to remain vigilant, as this type of fraud has increased in recent years.
Fraud by false representation:
Section 2 of the UK Fraud Act 2006 stipulates the offence of fraud by false representation. To be found guilty of fraud by false representation, an individual must have made a false representation with the objective of gaining a benefit for either themselves or another individual, at the expense of a loss for the victim.
What is ‘false’ representation? False means that whatever is being represented is purposely misleading or untrue. Section 2 is focused on the Dishonesty Element. To decide whether dishonesty has occurred, the two following factors will be taken into consideration:
– Objective: If the prosecutors believe that an individual’s objective was dishonest, then they will have to consider the following factor.
– Subjective: The prosecutors here will have to decide whether the individual was consciously aware that they were being dishonest, and not just confused by the situation which they were presenting an account of. It tends to be fairly obvious if an individual was aware of their dishonesty and can therefore be the final stage in deciding if an individual is guilty of fraud by false representation.
If it is decided that an individual is responsible for fraud by false representation, then the maximum sentence for this will be 10 years’ imprisonment subject to the UK Fraud Act 2006 penalty thresholds.
The fire at Grenfell Tower in the UK in June 2017 has been subject to many fraud investigations in recent months following the disaster. Some individuals in the aftermath have claimed that they were residents at Grenfell Tower before the fire, allowing them to claim cash and compensation from the government through fraud by false representation. By July 2018, there have so far been six convicted criminals on charges of fraud by false representation.
The most recent conviction is that of 26-year-old Yonatan Eyob, who claimed £81,000 from the government in cash for compensation following the fire and free accommodation, as well as a further £11,000 towards new permanent housing. Eyob claimed that he lived in one of the flats in Grenfell Tower. However, the flat that Eyob said he lived in was actually home to a family of five, who tragically died in the fire.
Neighbours’ testimony and an investigation into Grenfell Tower’s CCTV show that Eyob had never actually lived at the Tower and therefore he has been ordered to appear at Isleworth Crown Court on 24 August 2018 to face sentencing for fraud by false representation. Eyob’s charge includes dishonesty for making a false representation for accommodation and subsistence between June 2017 and June 2018.
Fraud by false representation can be common, and individuals and organisations need to be aware of when this could have potentially happened. If you believe that fraud by false representation could have taken place, then you should report this crime to Action Fraud, the UK’s national fraud and cyber crime reporting centre.
Financial fraud is the considerable offence of hacking another individual’s financial transactions or accounts, for a fraudster’s gain. Fraudsters who commit these offences are well-trained and aware of how to receive the highest reward from a transaction. Financial fraud is increasing and therefore it is essential for individuals to protect their financial information from the potential corruption of fraudsters. It is important to be vigilant and aware of when financial fraud has taken place.
What are the different types of financial fraud?
Today, fraudsters are very sophisticated, and can infiltrate another individual’s financial information through many different methods. In 2016 there was a 2% increase from the previous year which led the total of financial fraud losses to become a staggering £768.8 million. This daunting financial loss is a result of fraudsters attacking victims through various means. Consequently, organisations and individuals need to be aware of the varying forms of financial fraud which could affect them.
Credit/Debit Card Fraud:
This a common form of financial fraud. The widespread nature of this type of corruption is partly due to individuals not being vigilant enough to protect their financial information from fraudsters. All it essentially takes is for an individual to either lose their card or for a fraudster to steal an individual’s card and then they can process unauthorised financial transactions. This will only be able to continue until the victim notifies their bank of what has happened. By March 2017 there had been around two million fraudulent cases reported and it was found that payment card fraud is the fastest growing. It is clear that we need to become more vigilant when it comes to our payment cards.
Counterfeit Cards:
This occurs when a fraudster has managed to gain access to enough of your financial and personal information to create a fake card. This can be a very deceptive form of financial fraud, as the victim will rarely be aware of this occurring, due to them having their own bank card with them still. It will only be brought to the victim’s attention once enough fraudulent activity has built up to create a cause for concern.
Ponzi Schemes:
This is how financial fraud can potentially take place within the investment sector, as fraudsters have the potential to create an investment scheme which supposedly promises a high rate of return for fixed term investments. However, in reality the money is not actually invested and is instead used by the fraudster for their own financial benefit.
Phishing:
Due to the rise in online banking and the expanding cyber world in general, fraudsters have been able to utilise cyber outlets to attack online bankers. Phishing emails can be sent to online bankers with the pretence of being a bank and therefore they can request the login details and passwords of individuals, without it seeming out of the ordinary. Online bankers who invest in this phishing email will have all of their financial information compromised to the benefit of the fraudster.
How can you protect yourself against financial fraud?
Banks work extremely hard to combat fraud and to protect the financial and personal information of their customers through robust security systems. These security systems have proved to be fairly successful, as last year UK banks were able to stop £7 of every £10 of attempted financial fraud from occurring. Consequently, fraudsters have now attempted to contact financial customers directly by asking them for online banking passwords.
The director of Financial Fraud Action UK, Katy Worobec, has said that banks and the payment industry as a whole can only do so much to protect their customers against fraud. It is also the responsibility of an individual and a company to be vigilant with their payment conduct. The International Financial Reporting Standards (IFRS) has committed to making international financial markets fair and stable, and has contributed to the crackdown on financial fraud.
It is clear there are many bodies committed to putting an end to financial fraud, and therefore it is an individual’s responsibility to be vigilant and understand specifically how finance fraud can affect them. If you have a suspicion that you have been a victim of financial fraud, contact relevant bodies such as Action Fraud or your bank to see what they can do for you.
Cyber fraud is the most common and threatening form of fraud which takes place internationally. The cyber world has been expanding and growing throughout the twenty-first century, allowing fraudsters to hack victims’ personal and financial information in a variety of ways. Fraudsters can use the information which they gather to then financially fund themselves, or worryingly they might use this money to fund terrorism. Therefore, it is essential that individuals and organisations are aware of how to protect themselves against cyber fraud.
How serious is cyber fraud and how does it occur?
The cyber world is expanding. We now store more personal and financial information on the internet than ever, and this has unfortunately instigated the increase in cybercrime. The cyber fraud crimes are increasing in severity. For example:
The Annual Fraud Indicator in 2017 found that fraud had cost the UK £190 billion in that single year alone. Moreover, the Office for National Statistics (ONS) have found that of the fraudulent crimes which cost governments masses of money, most of these crimes are in the form of cyber fraud.
Cyber fraud can be considered as any fraudulent crime which is conducted via a computer or computer data. The crimes are extensive. Fraudsters can use the cyber world to gain access to victims’ personal identity, their online accounts and their bank accounts. They can then use the money and information from this to fund terrorism. The extensive and popular use of internet banking and mobile banking means there are more opportunities than ever for criminals to commit cyber fraud. It is a very serious crime – one that needs to be cracked down on.
In 2017 the UK had a positive reaction to cyber fraud as UK cyber card fraud crimes fell by 8%. This has been the first time in the UK since 2011 that cyber fraud crimes targeted at the financial sector has fallen. On top of this, the UK market is the first to witness a reduction in cyber fraud crimes directed at card not present (CNP) transactions. This is due to the UK’s effort to combat cyber fraud as it has invested money into more robust security systems in conjunction with banks. However, this has not been the situation everywhere in Europe, as Denmark and Hungary are still being attacked with cyber fraud crimes aimed at the financial sector, especially CNP transactions.
How can you protect against cyber fraud?
Cyber-crime and fraudsters normally try to hack into victims’ personal and financial information online via phishing emails and viruses. If you receive an email with an attached link which either asks you to present your bank information or to confirm your bank account information, do not do so. The key to avoiding cyber-crime is to understand what your bank and related bodies would ask of you, and they would never email or call you asking for your bank information. Even if the email or the phone call sounds legitimate and honest, you should call the bank yourself and ask them if this email originated from them or not.
Make sure you destroy all traces of your personal and financial information. If a bank has posted you information with your bank details on, ensure that you shred this information, as a fraudster could find this information in a bin and utilise it online to process a CNP payment.
Furthermore, make sure you protect your computer with an anti-virus software to combat any contact made between the fraudster and your computer.
If all of your preventive methods fail, you can always contact the relevant bodies which have been established to combat cyber fraud, such as Action Fraud, which is the UK’s national fraud and cyber-crime reporting centre. Furthermore, the National Fraud Authority is an executive agency of the UK Home Office established to protect the UK economy from fraud. There is help out there for the victims of cyber fraud. It is now time for individuals to be vigilant in protecting their information to combat cyber fraud.