Do you have sufficient checks in place to protect you from your own staff?

Do you have sufficient checks in place to protect you from your own staff?

The UK’s Fraud Prevention Service CIFAS has released Staff Fraudscape.  This is a 40 page report which analyses the insider frauds.  It also looks at the reasons behind the 14.5% increase in such frauds which has been recorded by members of the CIFAS Staff Fraud Database during 2011.
The document can be found here.
Confirmed cases of fraud committed by staff within the employer organizations rose by 14.5% in 2011 compared to 2010.  However, when the types of fraud are split into different categories, certain types of fraud have seen huge increases.
There was a 41% increase in the number of dishonest actions by staff to gain a benefit by theft or deception.  This includes such instances as theft of cash from a customer (which made up 31% of these cases) and theft from the employer (23%).  
This type of fraud may have seen a large increase as a result of the wider economic situation.  Senior counter fraud professionals believe that this type of fraud will pose the biggest danger to organizations in the future.
There has been a 25% drop in the number of frauds involving the unlawful obtaining or disclosure of personal data, which suggests that organizations are tightening up the control and access to data.  In 74% of these cases data was given to third parties.  This highlights the risk of organized criminal involvement.  
Employment application frauds that have been discovered before employment commenced dropped by 9% in 2011.  Attempts to conceal an adverse credit history increased by 50%, which again is likely to be in part a result of the economic downturn.  
The types of staff fraudster is consistent with that seen in 2010.  Over 80% of those guilty of disclosure of personal data were below 30 years.  64% of female staff fraudsters were recorded as acting dishonestly to obtain benefits by theft and deception.  
Internal controls and monitoring were the main ways in which staff frauds were discovered in 2011.  This was the way that the fraud was exposed in 44% of cases.  There was a very low rate (3%) of whistleblowing by staff.
Staff Fraudscape presents analysis of staff fraud patterns, and also includes findings of a survey of senior fraud prevention and HR professionals, to analyse the reasons behind the frauds.  The report also includes several examples of the frauds discovered by CIFAS Staff Fraud Members.
CIFAS Staff Fraud Adviser, Arjun Medhi, comments: “By presenting the analysis of patterns and frauds, together with real examples of the types of fraud recorded by Staff Fraud Members, CIFAS is able to shed more light than ever before on the precise nature of the problems faced by organisations when countering the threats from within.”
CIFAS Communications Manager, Richard Hurley, notes: “It is well known that economic and personal circumstances lead some staff to commit fraud against their employer. Equally, the links between insider fraud and organised criminal networks have been demonstrated previously by CIFAS. What Staff Fraudscape reveals, however, are the many nuances — from a 79% increase in staff manipulating details of a customer account (frequently to help family or friends who are in financial difficulties) through to a 59% decrease in staff stealing personal data for their own use — indicating, therefore, a higher level of criminal involvement. While the general catalysts for staff fraud remain well known, Staff Fraudscape helps to clarify the range of issues — thereby providing better intelligence and counter fraud insights directly as a result of the data sharing efforts of CIFAS Members.”
Arjun Medhi concludes: “While the vast majority of staff are honest and trustworthy, staff fraud is a real problem that poses real and continuing risks. Staff Fraudscape lays bare the intricate complexities involved in battling fraud; balancing preventative measures against the need to treat innocent staff fairly, and the continuing evolution in the types of fraud being committed.” 
As the economy moves into a double-dip recession, the temptation for some staff members to turn to fraud may increase.  Firms should be asking themselves if they have sufficient checks in place to protect themselves from such actions from members of staff
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