Economic crime: Prevention is better than cure


PwC’s 2016 edition of the Global Economic Crime Survey revealed that almost half the incidents of serious economic crimes are perpetrated by internal parties – a cause for serious concern and attention.



PwC’s 2016 edition of the Global Economic Crime Survey revealed that almost half the incidents of serious economic crimes are perpetrated by internal parties – a cause for serious concern and attention.

Rudi Kruger, general manager at LexisNexis Governance, Risk & Compliance division, said: “Internal parties are trusted to perform their jobs with integrity, but – as shown in the PwC survey – this is not always the case. Most commonly, fraud is perpetuated by top and senior managers, finance employees, IT staff, sales and purchasing and payroll employees. And this is a global phenomenon – not just unique to South Africa.”

However, in South Africa, law enforcement is not adequately resourced and trained to investigate and prosecute economic crimes, according to 70 percent of South African respondents to the Economic Crime Survey.

“When a great number of economic crimes are taking place internally and the relevant law enforcement actors are not fully equipped to help, companies are left to deal with the fraudulent actions of their employees on their own,” said Kruger. “Companies may view addressing fraud internally as a costly and time consuming affair that brings with it heightened reputational risk, which nobody wants.”

Based on these factors, there is a dire need to focus on prevention, rather than cure, says Kruger. “There are many ways that fraud and internal incidences of economic crime can be minimised. One of them, and possibly the most significant, is through thorough background screening of employees and potential employees,” he added.

“A great deal of emphasis must be placed on the recruitment process. When looking to add on any candidate for any position, no matter the company, it is imperative to ensure that criteria are designed to assess their integrity in addition to their ability to do the job,” said Kruger.

He advises companies to run a background screening check on all candidates. “With the right software, you will be able to verify their identity, credit information, criminal records and qualifications. Automated solutions such as RefCheck Advanced allow users to do all this and a lot more, allowing you determine if potential hires are capable of fraud,” said Kruger.

Additionally, Kruger offered the following tips:

• Avoid complacency – Never assume your company has a low risk of fraudulent activity as it can happen to any business, regardless of size.

• Study the economic landscape, its effects on the average person and how it can lead to the manifestation of economic crime

• Ensure internal and external audits are thoroughly conducted

• Ensure all roles and responsibilities are correctly aligned with current risks

• Maintain a strong ethical culture within the workplace on all levels

• Conduct ongoing employee assessments

RefCheck Advanced is utilised by more than 2000 companies and recruitment agencies and can also provide a valuable employee due diligence and audit tool. RefCheck services include verification of tertiary and secondary academic qualifications held by the individual from registered local and international institutions; identity and South African citizenship validation; fraud history checks via the South African Fraud Prevention Services; credit history checks through detailed TransUnion and Experian credit bureau reports; criminal history check via AFISwitch (electronic fingerprint collection and processing); verification of local and international employment history and professional association membership; verification of drivers’ licence status; and matching of bank account against an identity number or registration number. As an online consent-driven service, RefCheck allows 24/7 access which is password and username restricted. A user can determine which information they require verification for each candidate, dependent on position or seniority. The solution carries no registration cost or monthly subscription fee, with users being charged only for usage via a monthly statement.

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