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Fraud, K(no)w It Before It Knows You!

October 6th, 2018

Fraud, K(no)w It Before It Knows You!

A poor street vendor from Pakistan came under the scrutiny of Federal Investigation Agency of Pakistan as his account had been credited with PKR 2.225 billion. He had no idea about the money until he received a summon from the investigation agency. As per reports, the investigation agency said that this case was linked with a multi-billion-rupee money laundering scam, the biggest in Sindh’s history till date. The victim has no idea about the account or the money and considering he is a street vendor, no one would be suspicious of him. (Read to this story here: https://goo.gl/viMzBx)

This is an example of a big-ticket money laundering scam. Clearly, nobody is safe from scamsters in today’s day and age. We live in a digitally connected world, which adds to our convenience but also makes us more susceptible to frauds and scams.

For financial institutions, frauds are a growing concern. They are constantly trying to develop regulatory measures and robust systems to combat the looming fear of falling prey to scamsters. Combatting fraud requires a holistic effort from the entire organisation with internal audits and risk management measures in place.

49% of global organisations admitted to experiencing economic crime in the past two years as per the findings of a recent global economic crime and fraud survey. With a percentage so high, it is imperative to know what the types of frauds are, characteristics of the people behind it, and what is the potential impact of the crime on the organisation.

Asset misappropriation, Cybercrime and Fraud committed by the consumer are the most common types of frauds. Internal employees are responsible for an alarming 52% of the frauds, while 40% frauds are connected to external stakeholders of the organisation like agents, shared service providers, vendors and customers. Fraudulent activities can severely impact the reputation of the organisation and the morale of the employees. Customers, business partners and regulators can lose faith in the company and sever ties with them.

Even though economic crimes are growing at a rapid rate across the globe, companies are resorting to passive or reactive approaches to resolve this problem. It is important to understand and accept that frauds are not only external threats and every employee of the organisation is responsible for recognizing a scam. Organisations must align all their employees, including senior management to a proactive and timely risk audit culture, explain the kinds of potential frauds and how to detect them and encourage employees to freely report any suspicious activity.

To imbibe the risk culture in our core values, Xpress Money undertakes risk assessments at regular intervals. To engage all the employees in the organisation, we are celebrating a K(no)w Risk week, where various activities will be undertaken to promote a positive risk culture. Fun activities like a risk quiz, spontaneous risk quiz with randomly chosen employees, risk crosswords, etc. will be held. Teams who have made significant contributions in driving frauds and risk control efforts within the organisation will be felicitated as well as a session by an industry expert on fraud risk dynamics will be held for our employees. We will be conducting all these initiatives, as information, awareness and a proactive attitude are important tools in managing risks.