CRI™ Group’s Plans for International Anti-Corruption Day

International Anti Corruption Day 2021

International Anti Corruption Day 2021 is observed on December 9th every year as a reminder for everyone within the corporate industry and beyond to actively speak out and fight against corruption in our day to day lives.  The United Nations officially declared International Anti-Corruption Day the day to enhance awareness of adopting an anti-corruption stance.

CRI is proud to announce our role on this important day. We are pleased to announce that we at CRI Group™ will be hosting a free webinar alongside our sister brand, Anti-Bribery Anti-Corruption (ABAC™) Center of Excellence Group, organised courtesy of the Malaysian International Chamber of Commerce & Industry (MICCI). The webinar is scheduled to take place on December 9th 2021, at 10:30 MYT.

Find out more about the webinar. Seats are limited to 50 places, register now

The “Know-how to defend your company from disastrous litigation with Third-party Risk Management and Due Diligence” webinar will be looking into the following points:

• Third-party due diligence and oversight as a robust anti-corruption measure for companies to adopt
• Risk-based due diligence and regular supervision of third-party business partners
• Informing third-party business partners of their duty and obtaining a reciprocal commitment
• Steps for business partners to report suspected bribery or corruption
• Other activities to prevent and detect corruption
• Undisclosed third-party transactions
• Material misrepresentations or commissions
• Unreported financial difficulties
• Criminal or regulatory sanctions
• Prior bribe or corruption allegations
• Unknown legal or bankruptcy proceedings
• Politically exposed Persons -PEPs

In recent years, third-party risk management has become a primary concern for organisations amid increased outsourcing against a backdrop of rising costs, digitisation and low-interest rates, which have put downward pressure on margins. While there are many benefits driving outsourcing, e.g., increased efficiency and scale, it naturally also increases the risk and complexity of third-party relationships.

Corruption and bribery can impact any organisation and cause severe harm to businesses, including financial loss, dire legal consequences, brand damage, organisation’s reputation & sustainable development. This coupled with increased lengths of agreements, on average five to seven years, the need for ongoing performance management becomes that much more significant, which is why both our brands feel it is vital to address. 

Please make use of this opportunity to educate yourself better and your personnel to work towards a more transparent corporate model while seamlessly integrating it into your day-to-day lives. Ethical business always begins from within, and CRI® Group is more than present to help you through this. 

TALK TO US

Matters surrounding risk management and compliance can be daunting, so why not contact CRI® Group? Our experts have years of experience and have been trained to provide your business with bespoke advice that fits your organisations’ needs. Don’t hesitate. Implement preventative measures in your workplace today and guide your team to an ethical and correct way of working. 

Who is CRI Group™?

Based in London, CRI Group™ works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, 

In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC) Center of Excellence – an independent certification body that provides education and certification services for individuals and organisations on a wide range of disciplines and ISO standards, including ISO 31000:2018 Risk Management- Guidelines; ISO 37000:2021 Governance of Organisations; ISO 37002:2021 Whistleblowing Management System; ISO 37301:2021 (formerly ISO 19600) Compliance Management system (CMS); Anti-Money Laundering (AML); and ISO 37001:2016 Anti-Bribery Management Systems ABMS. ABAC offers a complete suite of solutions designed to help organisations mitigate the internal and external risks associated with operating in multi-jurisdiction and multi-cultural environments while assisting in developing frameworks for strategic compliance programs. Contact ABAC for more on ISO Certification and training.

OUR MISSION AND VISION

• CRI mission is to safeguard the corporate world by detecting and exposing those elements that can cause irreparable harm to a business.
• Stand up against the outside forces that, through corruption, collusion, coercion and fraud, can cause financial, organisational, reputational and legal harm to our global clients.
• Stand out as the preeminent provider of specialised investigative services that enable our clients to exhibit the highest standards of business integrity, ethics and behaviour.

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WEBINAR | Do you Know the Importance of the Whistleblowing Standard?

However, despite the importance of implementing a whistleblowing framework, many organisations choose to overlook it or not invest as much time into implementing the framework into everyday working life and this can have dire consequences for the organisation against its competitors, there may be a loss of financial gains and as well as a corrupt ethical moral code spreading amongst the employees. Infamous corporate governance cases, such as Enron and WorldCom, have enticed the spotlight of corporate citizens to the issue of poor, yet ineffective, sound governance practices in corporate strategies; as a result, the momentum of implementing and performing sound governance practices by the world national bodies, government agencies, and business community has been triggered which is why we at CRI Group™ are pleased to celebrate Fraud Awareness Week which will take place from November 14-20th 2021. In the lead up to Fraud Awareness week, we want to discuss how exactly should you go about addressing a situation surrounding Whistleblowing. 

What is Fraud Awareness Week?

International Fraud Awareness Week, or Fraud Week, was founded by the Association of Certified Fraud Examiners (ACFE) in 2000 as a committed point in time to increase recognition of fraud. The week-long campaign encourages corporate leaders alongside employees to proactively take action to curtail the influence of fraud by advocating for anti-fraud awareness and additional training. Corporations and entities are urged to enrol as Official Supporters prior to International Fraud Awareness Week, and to host training prospects, disseminate anti-fraud material or otherwise promote anti-fraud pursuits during the course of the week.

Zafar Anjum, founder and CEO of CRI Group™ says that “Fraud Week reminds us that awareness is any organisation’s first line of defence against fraud and corruption, as properly trained employees will have a better opportunity to recognise the red flags of fraud, and a better understanding of their organisation’s zero-tolerance policy toward such behaviour”.

We are proud to announce that our sister brand ABAC™ Center of Excellence will be hosting a free webinar on Friday 29th October 2021 in honour of Fraud Awareness Week to discuss how to implement and successfully carry out the duties of a whistleblower. However, be quick to sign up as seats for the webinar are limited to 30 participants. 

REGISTRATION EXPIRED 

TOPIC OF DISCUSSION

At both brands, we aim to use our events as a means of educating corporations as well as opening the path to receiving tailored advice which is beneficial to each and every individual corporation in the long run. In this specific webinar, we intend to discuss the following:

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Fraud Prevention Strategy: Build One in Five Simple Steps

Fraud Prevention Strategy: The 5 Simple Steps

A fraud prevention strategy is one of the key policies that can aid an organization in safeguarding itself against reprimands of the matter. One of the greatest encounters a fraud auditor can confront is the mission of persuading management that the peril of fraud exists across all aspects of corporate culture – regardless of whether it is from internal factors or external factors. Fraud cannot ever be eradicated from the corporation as collusion is adept in continually conquering routine organizational regulations.

What is the strategy?

The objective of a Fraud Prevention Strategy is to identify a high-level proposal on how an organization should implement its fraud prevention policy in the presence of its internal and external influences. The strategy forms the most important part of the fraud deterrence strategy; thus, the policy an organization chooses to implement must be straightforward and pragmatic.

Combating fraud requires a distinct and refreshing methodology that entails including all three facets of the fraud cycle:

• Fraud deterrence and prevention
• Fraud detection
• Fraud investigation

Preferably, with the fraud cycle in mind, every enterprise ought to put together a distinctly specified fraud prevention strategy that integrates the following:

• Determine the proper culture with the proposed policy: having protocols and policies in place for dealing with fraud will help you establish a good grounding for identifying it.
• Counteract and detect: To detect fraud, you need to have effective systems and processes in place covering all aspects of your business.
• Investigation of any occurrences in which fraud occurs.
• Review and monitor policies and occasions in which fraud has transpired regularly to ensure that fraud levels stay below the goal amount.
• Learn from previous occurrences and update training procedures.
• Risk management covers all types of risk, from corporate and social responsibility compliance to performance measurement. 

To learn more about third-party risk management, why not check out our 

What should be established in a fraud prevention strategy:

1. Whistleblowing policy

Whistleblowing is the act of exposing information about misconduct in the workplace and is a crucial element in any prevention strategy. When whistle-blower hotlines are implemented and sustained correctly, they can substantially decrease an organization’s exposure to fraud by permitting for prior detection and thus savings in the form of reduced fraud losses from the prior detection.

2. Identify the risks:

The risk of fraud is not solely based on an employee’s background but also a myriad of other factors. Most notably, it is important to be able to identify risks by nature of items (some examples include size and value, ease of resale and cash), nature of the control environment (including separation of duties, safeguards, complexity, turnover and related party transactions) and pressures ( i.e., level of dissatisfaction – if the workforce is unhappy with the company, they will be more inclined to engage in fraud, expectations and guarantees). Identifying these risks is the first step in figuring out how to counteract them, thus preventing fraud.

3. Implement effective controls:

When it comes to implementation, organizations need to ensure that they complete the action plan and then refer it to an appropriate person – in most instances. This is from HR and other figures in leadership to management of employees. It is then up to the subordinates to assist them with implementing the strategy, reviewing the strategy, or delegating it to the employees.

Most policies implement:

• Making employees aware of emergency procedures
• Making employees aware of the location of first aid stations
• Educating employees on the location and obvious danger and workplace hazards
• Examine health and safety workplace responsibilities; wear the necessary protective clothing or equipment, participate and have input to management report incidents or mishaps as considered essential by management.

4. Increase awareness of the risks:

It must not be presumed that staff members have an innate perception of the risks of fraud or that they have any understanding of the scope of risks that encircle them. This means that it is incredibly important to stimulate a risk-conscious culture within an organization.

Some examples of methods to increase such awareness include:

• Performing risk audits and engaging as many individuals as possible in the organization in the risk auditing procedure
• Benchmarking – studying “best practices” from other organizations that have executed risk management.
• Sending organization personnel to attend industry seminars on fraud prevention as well as risk management

5. Plan for the worst:

It might sound pessimistic, but it is always best to prepare yourself and your employees for the worst-case scenario. Unfortunately, as hard as we try to minimize fraud, it cannot, be fully eradicated. If it appears too good to be true, it most likely is. It is good practice to meticulously probe all agreements, prospects, transactions, data and documents.

Want to know more about recruiting the right people for your organization? Visit our page on Background Screening services or view our EmploySmart brochure.

Crucial components that a proper fraud prevention strategy accomplishes:

It is easy to infer that fraud can leak into all aspects of corporate culture and can destroy an organization from within. Despite this issue, several organizations opt not to implement a fraud prevention strategy – it is primarily implied that this is ascribed to the absence of knowledge circulating on the benefits of such a strategy. However, the rewards reaped from this type of policy is beneficial to corporations eventually and can reap the rewards such as:

• Lower consequential loss pertaining to fraud
• Lesser/no legal and investigative costs relating to fraud
• Lesser/no regulatory fines paid in the occurrence of fraud
• Better time management can be used to enrich employees’ knowledge and experience at the organization.
• Reduced insurance premiums
• Lower turnover of key staff and customers
• The lessened cost of/capability to increase new finance

Overall, the process of preventing fraud can be an extensive one, but one whose benefits outweigh the onerous course. Protect your organization from liability, business interruption and brand damage by partnering with the CRI® Group. Our 3PRM solution address various specific areas, including:

• Third-Party Integrity Due Diligence & Screening: ensures global compliance, provides adequate monitoring & protection against potential litigation;
• 3PRM Enhanced Background Checks: uncovers derogatory information within the public & private record resources through risk-based background checks, including investigative research into suppliers & individuals, ultimate-beneficial owners;
• ISO 37001 Anti-Bribery Management System: CRI® Group’s independent and accredited Certification Body can examine your Anti-Bribery & Anti-Corruption procedures & issue an accredited Certification; and
• ISO 37301 Compliance Management System: CRI® Group’s independent certification body helps companies worldwide to increase & measure their efforts against regulatory compliance risks.

If you still have any questions surrounding fraud prevention, why not contact CRI®? Our experts have years of experience and have been trained to provide your business with bespoke advice that fits your organizations’ needs.

Don’t hesitate to prevent fraud in your workplace today.

About us…

Based in London, CRI Group™ works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, 

In 2016, CRI Group™ launched the Anti-Bribery Anti-Corruption (ABAC™) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC™ operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organizations. Contact ABAC™ for more on ISO Certification and training.

LET’S TALK

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Anti-Money Laundering (AML) Checks; The Lowdown

Anti-Money Laundering checks is a broad term applied to define checks conducted as a portion of the UK’s Anti-Money Laundering regulatory framework. An AML can be a check on a person carrying out a specialised role, or an organisation supplying goods or services.  The official structure comprises of various distinct Acts and Regulations and differs from nation to nation depending on the laws and legislations the land has in place. The UK law makers are frequently recognised to pursue regulations that aim to counteract, identify, and report money laundering pursuits. This is in an effort to deal with the ever-increasing concerns encompassing criminal activity, terrorism, extremism and profits of corruption. In that sense, the UK Government have succeeded in detecting various vital segments that may be prone to money laundering and ought to take the lead in advocating for best practice and greater regulation within corporate organisations. This is comprehensive of a number of legal and fiscal sectors.

Why are Anti-Money Laundering Checks (AML) Necessary?

Anti-Money Laundering checks intend to generate alterations in the notion adjacent to money laundering as well as other types of monetary violations. Countless trade regulators and organisations employ Anti-Money Laundering checks as the first step in the HR and recruitment process as it helps HR people ensure that employees and candidates have the qualification to work or practice. Checks are also frequently utilised to detect clients while also confirming that additional organisations in the supply chain are proper and appropriate for the business needs. There is no exact collection of obligations for all Anti-Money Laundering checks nevertheless, the existing applicable regulations that are in place to pursue the advancement of risk-based intelligent surrounding money laundering and other such activities. However, it is important to note that there are laws in place that correlate with the need for an anti-money laundering check. Some of the legislations in the UK for instance include:

• The Terrorism Act 2000 (as amended by the Anti-Terrorism Crime and Security Act 2001 and the Terrorism Act 2006
• Anti-terrorism, Crime and Security Act 2001
• The Proceeds of Crime Act 2002 (POCA) as amended by the Serious Organised Crime and Police Act 2005 (SOCPA)
• Counter-terrorism Act 2008, Schedule 7
• Terrorist Asset-Freezing Act 2010
• The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
• The Criminal Finances Act 2017

An efficient Anti-Money Laundering structure is an indication of your organisations position in opposition to its competitors in the industry against the fiscal offenses. As international commercial nations become progressively more mindful of their obligations, international organisation must develop the comprehensive capability to report these matters and execute procedures, practices, and related risk assessment mechanisms in a bid to minimise their risk and consequence in the grand scheme of things.

CRI Anti-money laundering (AML) consultative solution intends to help the investigation of existing systems and further improve operational solutions that decrease your organisations risk of falling quarry to operative, supplier, or outside corporate and fiscal crimes. Our immense Anti-Corruption and Compliance network offers the defense you require when making significant bottom-line decisions crucial to your organisation’s success.

VIEW AML ADVISORY BROCHURE

What are the Outcomes of a Deficient AML Framework?

To have inadequate regulations can result in being indicted with participating in illicit pursuits surrounding money laundering and lead to several of the subsequent adverse outcomes:

• Damaged corporate reputations: brands and organisations who have a diminishing reputation can progressively expect both their supplier and consumer base to weaken causing brand devaluation. This can lead to monetary complexities as well as challenges being able to work in partnership with other organisations and suppliers as a great reputation ensures collaborators that your organisation conducts business lawfully and suitably making them more probable to want to work beside your organisation.
• Negative investor perceptions: in correlation to a wounded reputation, organisations may also find it increasingly challenging to find investors to back their ventures. This could lead to the premature shutting down of a business as well as other issues such as liquidation and bankruptcy.
• Corroding employee morale: trustworthy enterprise always begins from within the corporate culture. Engaging in illicit activities often result in high employee turnaround whilst also corroding employee morale and giving them the opportunity to embark on other illicit activities within the corporate area. This may lead to fraud, bribery and corruption commenced by the employees which is a detrimental and ominous oversight for any organisation. It’s also just as important to screen your employees so you know that your employees are competent for the role in question. Find out more about our employee background screening solutions here.
• Probable consumer boycotts: ethics are just important to a brands consumer as it is to the brand. In the wake of social activism, no organisation is renowned enough to not fall victim to a boycott effort. You may have some loyal consumers left but your organisation may end up with a longstanding, damaged reputation.
• Possible legal action: A general trend when it comes to issues surrounding money laundering is that it usually leads to further penalties surrounding fines and expenses. In this case, legal action not only damages the reputation of an organisation to investors, suppliers, and consumers, it can also result in fines & potential jail terms for company directors and fighting these cases are often as costly as they are time consuming.
•  

It is evident to see that the aftermath of partaking in illicit money laundering schemes and not implementing anti-money laundering checks can lead to the downfall of the entire organisation. And in a world of ever-tightening regulations, why wouldn’t you want to be one step ahead of the industry?

If the perception of an AML check still feels a little overwhelming to you, why not consider booking a free 30-minute consultation with one of our experts here at CRI® Group? Our specialists have years of experience and are qualified to offer your organisation personalised guidance to fit your professional requirements. Don’t hesitate, get in touch today and stay ahead of the rules and regulations that impact your organisation.

Get in Touch Today

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Meet Zafar I. Anjum, Group CEO

Building a 34 years’ career in anti-corruption, fraud prevention, protective integrity, security and compliance, Zafar Anjum is a highly respected professional in his field. As a trusted authority in fraud prevention and securities among corporate clients, government agencies and industry groups, he is known for creating stable and secure networks across challenging global markets.

With an impressive educational background coupled with his industry expertise, Zafar Anjum is often the first certified global investigator on the scene when multi-national EMEA corporations seek to close compliance or security gaps.

Starting his educational background in 1989 with his Bachelor of Arts Degree; he then went on to earn a Master of Science in Counter Fraud and the Counter Corruption University of Portsmouth in the United Kingdom along with specialized knowledge and certification in Fraud Investigations, Fraud and Financial Crimes, Corporate Fraud Control and Anti-Corruption. He was also awarded with Distinction in Master of Fraud and Financial Crime and included in Executive Dean’s List of 2016 by Charles Sturt University, Australia.

All while continuing to earn his LL.M Legal Practice (Intellectual Property) from the University of Law in the United Kingdom, which he was completed in February 2019. Alongside to enhanced further capabilities and competencies, specifically in the Bribery Risk Assessment framework, he has ICA International Diploma in Governance Risk and Compliance, ICA International Diploma in Anti-Money Laundering and ICA International Diploma in Financial Crime Prevention from the International Compliance Training Academy in the United Kingdom which is mapped and are also awarded in association with Alliance Manchester Business School, The University of Manchester.

His training and business acumen give Zafar Anjum in-depth precision when dealing with fraud risk management, security consultations, crime investigations, crisis management, risk governance, event security and strategic threat management for industry leaders seeking proactive long-term risk prevention.

His leadership abilities create strong collaborative relationships among prevention teams, crime investigators, government officials, and business executives seeking dynamic solutions across international marketplaces.

For industries needing large project management, safeguard testing and real-time compliance applications, Zafar Anjum is the assurance expert of choice for industry professionals.

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Common Fraud in the Pharmaceutical Industry Reported by Whistleblowers

Pharmaceutical Fraud

Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as Medicare in the US or equivalent state programs for financial gain to a pharmaceutical company. Several different schemes are used to defraud the health care system, which is particular to the pharmaceutical industry. These include:

• Good Manufacturing Practice (GMP) Violations,
• Off Label Marketing,
• Best Price Fraud,
• CME Fraud,
• Medicaid Price Reporting, and
• Manufactured Compound Drugs.

The pharmaceutical industry is regularly found to be engaging in fraud of many types, and it appears as though each year, the number of pharmaceutical fraud is on the rise. Each year big pharma giants end up spending billions of dollars in paying for fraud, misrepresentation of data and other such corruption allegations levelled out against them. In the last years, global pharma giants have paid fines to the tune of $11 billion for criminal wrongdoing, including withholding safety data and promoting drugs for use, beyond any licensed condition; GlaxoSmithKline paid a $3 billion settlement, Pfizer $2.3 billion settlement, and Merck $650 million settlement. Damages from fraud can be recovered using the False Claims Act, most commonly under the qui tam provisions, which rewards an individual for being a “whistleblower” or relator (law).

July of 2021 saw Bolton pharmacist David “Jason” Rutland pleading guilty to conspiracy to solicit and pay kickbacks and bribes in a $182.5m fraud case in which Rutland himself pocketed $13.3m. This conspiracy is noted as the state’s largest health care/pharmaceutical fraud to date. It is estimated that more than $515 million in fraudulent prescription billings were made to TRICARE, Medicare, Medicaid, and private health care benefit providers in Mississippi.

In the US, whistleblowers are uniquely positioned to report this fraud to the government under the False Claims Act.

Common Fraud in the Pharmaceutical Industry Includes:

• Unlawful Kickbacks
• Clinical trials manipulation/fraud against the Food and Drug Administration (FDA)
• Off-label marketing/Food Drug and Cosmetic Act (FDCA) violation
• Failure to comply with Current Good Manufacturing Practices (CGMP) requirements
• Compounded drug fraud
• Illegal drug-switching
• Misuse of the 340B drug discount program
• Medicaid best price fraud
• Medicare Part D Fraud
• Fraud by Pharmacy Benefit Managers (PBMs)

Understanding the Most Common Types of Pharmaceutical Industry Fraud Reported by Whistleblowers

Unlawful Kickbacks

The pharmaceutical industry influences doctors’ prescribing habits, especially in the US. Drug manufacturers and distributors may pay unlawful kickbacks to physicians or others in the form of sham “consulting fees,” luxury vacations, and expensive meals in exchange for increased prescriptions of the company’s drugs.

Clinical Trials Manipulation/fraud Against the Food and Drug Administration (FDA)

Drug manufacturers must obtain FDA approval before marketing a new drug. The FDA approves new drugs proven safe, effective, and properly labelled following extensive preclinical and clinical testing and analysis, which results in a wealth of data regarding the drug’s safety, efficacy, pharmacology and toxicology. The FDA relies on the accuracy of the data that drug manufacturers submit in New Drug Applications (NDAs). Pharmaceutical companies that make false statements to the FDA, omit relevant data in NDAs, or otherwise misrepresent the safety or efficacy of drugs in clinical trials can be subject to False Claims Act (FCA) liability. The same is true of drug companies that pay researchers to falsify clinical trial data.

Off-label Marketing/Food Drug and Cosmetic Act (FDCA) Violation

Pharmaceutical companies may not promote their drugs for uses, doses, or populations not specifically approved by the FDA as safe and effective. Such “off-label” marketing and promotion violates the FCA. This could include, for example, if a drug is approved for use in treating severe psychiatric disorders, and the drug company’s sales representatives promote it for widespread use in calming elderly patients in nursing homes.

Failure to Comply with Current Good Manufacturing Practices (CGMP) Requirements

Drug and medical device manufacturers are subject to strict FDA manufacturing rules known as the Current Good Manufacturing Practice (CGMP) regulations. The CGMP exists to ensure manufactured drugs’ identity, strength, quality, and purity and protect consumers from tainted, ineffective, and harmful drugs. Government-funded healthcare programs pay for prescription drugs on the premise that CGMP regulations have manufactured the drugs. If they are not, it can be a violation of the False Claims Act. This could include, for example, a pharmaceutical company’s manufacturing facility using dirty equipment to make drugs, or using equipment that does not accurately measure the type or amount of the active ingredients incorporated into a drug, and then selling these tainted drugs to patients covered by Government-funded health care programs.

Compounded Drug Fraud

Compounding pharmacies prepare medications tailored to meet the needs of individual patients by mixing drugs or changing the route of administration. Compounding pharmacies can violate the FCA by making large batches of drugs—known as mass-compounding—rather than providing the required individualised service, “compounding” drugs that are already commercially available, or inflating the number of particular medications used in the mixture to increase the cost. Compounded drugs are primarily regulated by the states, meaning efficacy and safety need not be proven to the FDA.

Illegal Drug-switching

As a general rule, pharmacies must fill patients’ prescriptions as written by the ordering physician. Putting aside situations where a generic drug may be substituted for a name-brand drug, pharmacists may not simply replace one drug for another or dispense a liquid form of a drug when a pill or tablet was prescribed. Billing government insurers for medications that have been so manipulated can violate the False Claims Act.

Misuse of the 340B Drug Discount Program

The federally mandated 340B drug discount program requires most drug companies to provide hefty discounts — typically 20 to 50 per cent — to hospitals and clinics that treat low-income and uninsured patients. Pharmaceutical companies are required to cap outpatient drug prices at a statutorily defined “ceiling price” equal to the Average Manufacturer Price (AMP) reduced by the rebate percentage or Unit Rebate Amount (URA). Manufacturers submit both the AMP and URA to the Centers for Medicare and Medicaid Services (CMS) quarterly and can defraud the government by misrepresenting these figures, overcharging 340B entities, and/or not providing rebates to which 340B entities are entitled.

Medicaid best Price Fraud

To obtain Medicaid coverage of their drugs, pharmaceutical companies generally must promise to give state Medicaid programs the lowest price made available to almost any buyer of the drug. To provide this price, pharmaceutical companies report their “best price” on a drug—often calculated based on the drug’s “average wholesale price” or “average manufacturer price”—and payback to Medicaid in rebates any amount the programs paid more than this price. Pharmaceutical companies can defraud Medicaid and violate the False Claims Act by manipulating their “best price” to reduce the amount of money they must return to state Medicaid programs.

Medicare Part D Fraud

Implemented in 2006, Medicare Part D, also referred to as the Medicare Prescription Drug Program, provides drug coverage for tens of millions of elderly and disabled Americans. Under the program, private insurance companies—referred to as Part D Sponsors—offer prescription drugs to eligible beneficiaries directly or through pharmacy benefit managers (so-called “PBMs”) and then submit claims to Medicare for the drugs’ cost. Fraud can occur under Medicare Part D in many ways, including:

Some of the more common types of fraud occurring under the Medicare Part D program include:

• Billing for drugs not provided.
• Billing for drugs not covered by Medicare.
• Billing for brand name drugs when generic drugs are provided instead.
• Billing for drugs—especially opioids and other controlled substances—diverted for illegitimate purposes.
• Billing for expired drugs.
• Billing for drugs dispensed without a prescription or with a falsified prescription.
• Billing for drugs dispensed with prescriptions from unauthorized, excluded, or non-existent healthcare providers.
• Billing for drugs provided in quantities that exceed approved limits.

Fraud by Pharmacy Benefit Managers (PBMs)

PBMs are an increasingly common target of fraud investigations. PBMs are third-party administrators of prescription drug programs for, among others, Medicare Part D plans. PBMs contract with health plans to provide pharmaceuticals at low prices, which PBMs keep low through negotiation, generic substitution, manufacturer rebates, cost-sharing, formularies, and other methods. PBMs commit fraud by failing to pass savings from rebate arrangements and subsidies to clients, developing forms that favour more expensive drugs, and improperly switching drugs to generic or different brand name drugs instead of prescribed drugs. Drug manufacturers commit fraud by, for example, providing price concessions on certain drugs in exchange for a PBM’s favourable coverage of the manufacturer’s drug.

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How Risky is Non-Compliance to Your Business?

How Risky is Non-Compliance to Your Business?

Last year we saw our fair share of AML (anti-money laundering) failures and violations, resulting in eye-watering FCA and HMRC fines. According to Ponemon Institute and security company GlobalScape recent report, the annual cost of non-compliance to businesses now runs an average of $14.8 million, a 45 per cent increase since 2011.

In recent years, adhering to the laws and standards and monitoring the Compliance of business processes has evolved as a major concern for business owners. Meanwhile, the range can be anywhere from $2.2 million to $39.2 million. On the other hand, the cost of Compliance was found to average $5.5 million, up 43 per cent from 2011.

Staying compliant with ever-evolving regulations has become an ‘obvious’ business imperative, and failing to adhere to these regulations can put organisations in a fix. Before we dive into the risks of falling into the ‘non-compliant dungeon, ‘ let’s understand corporate Compliance. Operating in a multiplicity of countries inevitably also means complying with any local regulations.

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What is Corporate Compliance?

Compliance at the corporate level involves adhering to a wide range of rules, regulations, laws, and standards designed to protect every aspect of your business. Right from obeying safety guidelines to following the standards for paying wages, an organization must comply with all the local, state, and federal laws.

Monitoring the Compliance of business processes with relevant regulations, constraints, and rules during runtime has evolved as a major concern in practice. Monitoring refers to continuously observing possible compliance violations and includes predicting their occurrence. Since the concept of business process compliance is vast, approaches related to process monitoring are hard to identify.

The cost of non-compliance and monetary fines have continuously increased in the past few years. However, business owners are becoming impatient, as these consequences would affect the organization. Increased complexity, enforced business changes, and individuals being held personally accountable are all set to continue because of continuous compliance failures.

Why is Compliance Crucial?

The following are six fundamental reasons why an organization should implement statutory Compliance.

• Reason No. 1: is required by Law – All registered companies are mandatorily obligated by the law to follow statutory regulations and comply with them.
• Reason No. 2: surprise audits – Non-compliance also invites unnecessary inspection and audits, leading to a waste of time and money.
• Reason No. 3: the financial penalties are high – Failing to adhere to statutory Compliance will lead to hefty fines and indirect losses to organisations.
• Reason No.4: potential imprisonment for everyone involved – Severe cases of non-compliance could result in imprisonment of the organisation’s CEO/Directors/Board members.
• Reason No.5: Brand Value and Market Reputation – Payment of fines and imprisonment can destroy a company’s brand name in the market it thrives in.
• Reason No.6: the organization can be forced to a shutdown – In cases that exhibit perilous non-compliance, authorities can even order companies to cease operations.

Several examples in the global business environment show the repercussions of non-compliance. Look at the following cases:

• Amazon found guilty of breaching Dangerous Goods Regulations
• Thames Water was ordered to pay record £20 million for river pollution
• Google Is Fined $57 Million Under Europe’s Data Privacy Law
• Westpac accused of 23 million breaches by money-laundering watchdog
• Italy’s civil aviation authority ENAC threatens to ban Ryanair over alleged non-compliance

The biggest fine so far was the £102m imposed on Standard Chartered for “poor AML controls”, which saw “breaches in two higher risk areas of its business.” This is the second-largest financial penalty for AML failures imposed by the FCA.

Improve Your Compliance

A comprehensive compliance solution:

• Reduces business risks;
• Helps to expedite global expansion;
• Enhances control and visibility; and
• Enables the elimination of business risks/

After all, when it comes to non-compliance issues, ignorance of the law is no defense. As they say – “Being Compliance is not a choice, but a mandate” the regulatory environment will only get fiercer day by day, and companies that miss staying abreast of the global legal amendments might regret big-time.

The UAE, for example, has cracked down on their “Ultimate beneficial owner” (UBO) compliance requirements – a requirement that costs roughly Dh15 but results in a penalty of Dh15,000 up to Dh100,000 if businesses fail to comply. The UBO requirement was set up to prevent illicit activities such as money laundering or financing of terrorism.

The requirement reveals anyone who has direct or indirect control of an organization and requires all such information to set up or renew business licenses to the UAE Government. It’s great to see so many new procedures being put in place that can help you safeguard your business. Are you interested to know how your organisation can excel in global Compliance?

LET’S TALK

Anti-money Laundering solutions made easy…

There are many advantages to outsourcing portions of your Anti-Money Laundering (AML) compliance program to CRI Group™ . CRI™ Anti-money laundering (AML) advisory services help analyze systems and develop effective solutions that reduce your company’s risk of falling prey to employee, supplier or outside corporate and financial crimes. An effective AML framework is a testament to your organization’s position against crime. Our unmatched investigative capabilities, worldwide presence and a long-standing reputation for independence and integrity make us uniquely qualified to resolve regulatory concerns.

Our vast Anti-Corruption and Compliance network provides the protection you need when making critical bottom-line decisions crucial to your organisation’s success. Leave it for experts. Ensure you have the 360-degrees analysis of your challenges – get in touch with the experienced CRI Group’s AML team for a bespoke quote.

Get a FREE QUOTE

Take a proactive stance with the highest level of Anti-Money Laundering (AML) compliance as a part of your essential corporate strategy. Contact us today to learn more about our full range of services to help your organization stay protected.

LET’S TALK

CONTACT INFORMATION

Zafar Anjum, MSc, MS, CFE, CII, MICA, Int. Dip. (Fin. Crime) | CRI Group™ Chief Executive Officer

37th Floor, 1 Canada Square, Canary Wharf, London, E14 5AA United Kingdom

t: +44 207 8681415 | m: +44 7588 454959 | e:

Filed under: All Industries, All Regions, All Solutions, Global, Resources by admin
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Inadequate Due Diligence Hit Space-Transport SPAC Momentus $8 Million SEC Fine

Inadequate Due Diligence Hit SPAC Momentus $8 Million SEC Fine

Inadequate due diligence hit SPAC Momentus $8 million SEC fine after misleading investors. The Securities and Exchange Commission (SEC) has charged the Momentus particular purpose acquisition company (SPAC), its sponsor SRC-NI, the sponsor’s CEO Brian Kabot, the company, and founder Mikhail Kokorich – which involved in a $1.2 billion space-transport SPAC for defrauding investors and obscuring the CEO’s status as a US national security risk.

The Fraud Claimed

The SPAC, Stable Road Acquisition Corp, had sought to merge with Momentus, a private start-up, to take it public. Momentus’s key offering was a “microwave electro-thermal water plasma thruster,” a way of zapping water vapour to propel a spacecraft, intending to transport satellites into space.

But Momentus’s propulsion tech failed to show results, according to SEC filings. A test mission fell well short of the company’s benchmarks, and a former Momentus employee said that the test yielded “no data to suggest that that thruster would deliver an impulse of any commercial significance.”

According to the SEC’s settled order, Kokorich and Momentus, an early-stage space transportation company, repeatedly told investors that it had “successfully tested” its propulsion technology in space when, in fact, the company’s only in-space test had failed to achieve its primary mission objectives or demonstrate the technology’s commercial viability.

The order finds that Momentus and Kokorich also misrepresented the extent to which national security concerns involving Kokorich undermined Momentus’s ability to secure required governmental licenses essential to its operations.

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The Compliance Issue: Inadequate Due Diligence

The SEC’s settled order finds that Stable Road repeated Momentus’s misleading statements in public filings associated with the proposed merger and failed its due diligence obligations to investors.

According to the order, while Stable Road claimed to have conducted extensive due diligence of Momentus, it never reviewed Momentus’s in-space test results or received sufficient documents relevant to assessing the national security risks posed by Kokorich.

The order finds that Kabot participated in Stable Road’s inadequate due diligence and filed its inaccurate registration statements and proxy solicitations. The SEC’s complaint against Kokorich includes factual allegations that are consistent with the findings in the order.

“This case illustrates risks inherent to SPAC transactions, as those who stand to earn significant profits from a SPAC merger may conduct inadequate due diligence and mislead investors. Stable Road, a SPAC, and its merger target, Momentus, both misled the investing public. The fact that Momentus lied to Stable Road does not absolve Stable Road of its failure to undertake adequate due diligence to protect shareholders. Today’s actions will prevent the wrongdoers from benefitting at the expense of investors and help to better align the incentives of parties to a SPAC transaction with those of investors relying on truthful information to make investment decisions.

SEC Chair Gary Gensler

The Litigation Against Momentus, Stable Road, and Kabot

Associate Director of the SEC’s Division of Enforcement, Anita B, mentioned in her statement that Momentus’s former CEO alleged to have engaged in fraud by misrepresenting the viability of the company’s technology and his status as a national security threat, inducing shareholders to approve a merger in which he stood to obtain shares worth upwards of $200 million.

The SEC’s order finds that Momentus violated scienter-based antifraud provisions of the federal securities laws and caused sure of Stable Road’s violations. It also considers that Stable Road violated negligence-based antifraud provisions of the US federal securities laws as well as specific reporting and proxy solicitation provisions.

The order finds that Kabot violated provisions of the federal securities laws related to proxy solicitations. Kabot and SRC-NI caused Stable Road’s violation of Section 17(a)(3) of the Securities Act of 1933. Without admitting or denying the SEC’s findings, Momentus, Stable Road, Kabot, and SRC-NI consented to an order requiring them to cease from future violations. Momentus, Stable Road, and Kabot will pay civil penalties of $7 million, $1 million, and $40,000, respectively.

Inadequate due diligence hit SPAC Momentus $8 million SEC fine. Source: US Securities and Exchange Commission 

What do you actually know about the integrity of the 3rd party and their way of doing business? Do they adhere to (inter)national regulations on anti-bribery and anti-corruption? Is it possible that there is a liability risk?

Due diligence on potential business partners when adding a new vendor or even hiring a new employee is vital to confirm the legitimacy and reduce the risks associated with such professional relationships. Global integrity DueDiligence360^TM investigations provide your business with the critical information it needs in making sound decisions regarding mergers and acquisitions, strategic partnerships, and the selection of vendors, suppliers, and employees. It will ensure that working with an, i.e. potential trade partner will ultimately achieve your organisation’s strategic and financial goals.

At CRI Group, we specialise in Integrity Due Diligence, working as trusted partners to businesses and institutions worldwide. Our people work with energy, insight and care to ensure we provide a positive experience to everyone involved – clients, reference providers and candidates. CRI’s unique identity and vision evolved from our fundamental desire to support our clients and their candidates. Safeguard your business and its integrity with DueDiligence360™.

Our DueDiligence360™ expose vulnerabilities and threats that can cause serious damage to your organisation and can significantly reduce business. CRI Group is trusted by the world’s largest corporations and consultancies – outsource your due diligence to an experienced provider, and you will only ever have to look forward, never back.

CRI Group investigators employ a proven, multi-faceted research approach that involves a global array of databases, courts and public record searches, local contacts, industry and media resources, and in-depth web-based research. Our resources include:

Protect your reputation and the risk of financial damage and regulator action using our detailed reports. They enhance your knowledge and understanding of the customer, supplier, and third-party risk, helping you avoid those involved with financial crime.

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To Check or Not to Check?

Background Checks: To Check or Not to Check?

Background checks don’t tend to make international news. They are the low-key diligent step in most well-managed recruitment processes to comfort employers that the person they are hiring is everything they seem – and nothing more.

That’s why the background checks of Belle Gibson, a super influencer who lied about having cancer, and Brett Kavanaugh, a nominee to the US Supreme Court, tend to make news headlines for who can you trust if not those in direct line of the public eye?

The Story of Belle Gibson & Brett Kavanaugh

Belle Gibson was a Melbourne “wellness” who rose to fame after sharing her story on Instagram of her terminal brain cancer and how she controls it through the power of healthy eating. Gibson claimed to have kept her cancer under control by turning away conventional medicinal practices and instead of following what she termed a “wellness” diet, a diet consisting of avocados, berries, no alcohol and so on.

Sounds impressive, right? To rid yourself of an incurable disease simply through eating better? Think again – it is too good to be true. The influencers lie caused untold damage, including turning a 44-year-old mother away from her chemotherapy in hopes of attaining Ms Gibson’s lifestyle.

But the reason why this lie broke headlines is because of what followed; a book deal with Penguin Books publishing company and an Apple app titled ‘The Whole Pantry’. It was evident that neither the tech giants nor the publishers thought to verify her assertions, thus leading to a $320,000 fine and a lot more emotional damage for the individual’s that Ms Gibson had provided false hope.

Context is everything, of course, and this job-for-life is one of the more crucial public office positions in the United States. Mr Kavanaugh had undergone six separate background checks during his career before the latest, which the FBI recently completed on behalf of the White House. Each of these will have been meticulous and thorough, right down to interviews with neighbours and acquaintances.

But you don’t have to be entrusted with national security clearance to pose a real risk to your employer. All staff members are in a position of trust, and even the humblest labourers or office workers will have privileged access to property – whether physical or intellectual. And this is not a theoretical risk – it’s a truism that employees or contractors cause the vast majority of security breaches.

The Compliance Perspective

Interviewing the ex-wives and sports coaches of factory and desk clerks is overkill and not economic. And that is where professional background checking comes in. It allows low hassle, cost-effective and fast checking for all recruits and employees to ensure everyone is what they claim to be, from the CEO to the company mascot.

Such checks will cover everything required to give HR directors and governing boards peace of mind: from criminal record checks and right-to-work documentation to education and qualification verifications and employment records.

A properly systematised process, supported by local intelligence, is essential to keeping costs low without compromising quality or effectiveness.

CRI Group is one of the few providers with a truly global reach and more than thirty years of experience in the sector. Our proven process means that we have one of the fastest turnaround times in the industry – typically just 3-5 days. Meanwhile, our more than 175 investigatory experts on the ground across the US, Europe, the Middle East and Asia, ensure we can navigate local customs, processes and regulations, no matter where your employees are based.

About CRI Group

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, 

We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds B.S. 102000:2013 and B.S. 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC ) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification.

ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s international team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC for more on ISO Certification and training.

Filed under: All Industries, Background Investigation, Industry Insights, Resources, United States of America, New York by admin
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How to Identify and Prevent Employee Fraud?

In 2017 the major European ABB conglomerate admitted that an employee took advantage of serious management failings to disappear with $103 million of the firm’s cash. According to CNN business, ABB CEO Ulrich Spiesshofer and Chief Financial Officer Eric Elzvik admitted that the organizations managers had failed to maintain sufficient segregation of duties in the treasury unit of its subsidiary in South Korea and did not provide enough oversight of local treasury activities.

To top it all off, ABB also failed to keep the signature seals of the South Korean unit secure which as a result, has lead the company became “bound to unauthorized financial contracts, resulting in undetected financial obligations.” 

Organizations rely on the honesty and integrity of their employees, however employee fraud does unfortunately cost companies vast sums of money. Employee fraud is a reality across all sectors – no matter how credible a job applicant is and how stringent your hiring process is – your business is at risk.

Tips on Identifying and Preventing Employee Fraud

When you trust your employees, it is difficult to think the worst of them, even when there are red flags – circumstances or patterns that are out of the ordinary – alerting you to the contrary. If you have suspicions of employee fraud, it is recommended to hire a forensic accountant to help you detect fraud, understand your circumstances, and put together evidence to target and confront the employee without tipping them off.

The good news is that you can plan and train your team to prevent this from taking place; the best thing you can do for your business is to learn how to recognise the warning signs of employee fraud and have robust procedures in place to minimise the risks and opportunities for fraud. Employee fraud covers a wide range of fraudulent activities in the workplace and can vary in seriousness including embezzlement.

Embezzlement involves an employee who transfers company funds into their bank account. One example of an act of embezzlement is deliberately writing cheques in the employees’ name or diverting company assets without authorisation, e.g. customers unknowingly pay into an employee-controlled bank account, not the business’. This is serious fraudulent behaviour, but employees usually get away with it without raising any suspicion by creating non-existent suppliers and fake employees or using counterfeit credit notes to hide/disguise misappropriated monies.

An easy way to spot this type of financial fraud is to scour through the bank statements and financial records of your organisation and check for irregular activities or patterns of unusual and unauthorised transactions.

Another common sign of embezzlement is when either an employee or a manager/director begins to enjoy a lavish lifestyle that is obviously beyond their means, e.g. holidays, cars, clothes/jewellery. In the case that you suspect an employee or director might be embezzling funds from within your company, it is essential to be discreet in your employee fraud investigation to prevent the employee from covering their tracks and disposing of substantial evidence.

Other Common Types of Employee Fraud

• Commission fraud – inflating sales figures to gain a more significant commission than deserved.
• Petty fraud – for example, embellishing an expense claim or taking office supplies.
• Money laundering – hiding the origin of illegally obtained money and washing it through your business.
• Insider Trading – making a profit by using valuable information that is unavailable to the public to their advantage, for example, confidential information that could impact the prices of shares, securities, goods/commodities.
• Manipulation of accounts – false information on sales, purchases or stock can be used to perpetrate fraud for personal financial gain, e.g. overstated trading profits to receive cash/share bonuses, or get a promotion, creating false trading accounts or stock/fixed asset write-offs to obtain goods.

What Can You Do (as an employer) to Minimize Employee Fraud?

The most effective way to minimize employee fraud as an employer is to implement robust management procedures and employee background screening; the implementation of these preventative measures will ensure staff are adequately investigated and monitored and consider the possibilities for collusion between employees – including a conflict of interest. Paying attention to only the procedures within your accounts department is not sufficient. The same procedures can help you across your operations, including sales and procurement.

Minimize the chances of employee fraud with the following procedures:

• Separation of employee responsibilities such as placing orders, recording invoices and collecting debts.
• Requiring purchase or payment authorization by more than one person.
• Compare actual to budgeted expenditure for unexpected patterns.
• Examine bank reconciliations thoroughly.
• Scrutinize cancelled cheques and cheques made out to employees or unusual vendors.
• Review supplier invoices for significant amounts, pricing or volumes.
• Verify credit notes and write-offs with receiving records.
• Install and monitor CCTV to deter theft of stock or equipment.

Fraud Triangle

An American criminologist, Donald R Cressey, devised a theory that involved three aspects that trigger fraud. Understanding these triggers will help you prevent fraud:

• Opportunity – the lack of internal controls or reporting structure/oversight increase the chance of fraud.
• Rationalization – the fraudster will rationalize the continued deception, which increases slowly, perhaps over a few years, becoming an entitlement, i.e. I deserve this. This offers the chance to stop some employee fraud early if robust detection procedures are in place.
• Pressure – overwhelming pressure, be it business factors such as company targets to meet or personal pressures, such as gambling or financial problems.

Implement Pre-employment and Post-employment Employee Screening Now!

Preventing financial loss is crucial for your business’s survival and expansion, which is why it’s essential to know and understand its obvious signs. Use the list above as a guide to protecting your organization.

To detect employee fraud professionally and thoroughly, it is recommended you seek the expertise of a skilled employee fraud accountant as early as possible. They can help you investigate your employees by reviewing your bank statements and financial documents and advise you whether an employee is committing fraud and to what extent. A forensic accountant’s report will also give you the evidence you need to take the necessary action against your employee and act as a deterrent to others.

For a Free and Confidential Chat to Discuss How We Can Help Your Business, contact us. 

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