Fraud in a wake of COVID-19 pandemic

COVID-19 continues to affect businesses in a myriad of ways. Organisations are having to adapt quickly to the fast-changing climate of the pandemic, and unfortunately, we’ve recently noticed some business practices of cutting steps in a few internal processes, such as hiring, or lack of risk management controls. It’s the vulnerable time for organisations – earlier we wrote that a crisis can bring out the worst in some people. Fraudsters who prey on people’s fear and confusion tend to waste no time when a global disaster strikes. COVID-19 is relatively new and still spreading, yet fraud schemes are multiplying much like the virus itself as criminals look for vulnerabilities among a fearful population. This pandemic also creates risks for employee fraud – CRI® Group’s survey revealed that nearly 77 per cent of HR professionals accept that there is a risk that employees can initiate fraudulent activity because of the work-from-home arrangement.

But employee fraud is not the only risk the business world faces today. Earlier this year, we published that some organisations commit fraud themselves and abuse the Coronavirus Job Retention Scheme by engaging in furlough fraud. They do this by accepting taxpayer money designed to help them pay salaries for furloughed workers, who are essentially “deactivated” to due to loss of business and quarantine – yet they pressure them to work (or they accept furlough benefits without the employees’ knowledge).

Supporting the fight against fraud

But there’s some good news. Proactive organisations are taking steps to fight fraud and highlight the consequences of committing fraud during these times. The International Fraud Awareness Week this November provides a spotlight on fraud and encourages businesses to introduce and/or improve internal and external anti-fraud activities to help promote transparency and honesty among their employees and company’s business relations. More and more companies every year join Fraud Week as official supporters and implement fraud-preventing initiatives. Learn more about what can you do too.

A few months ago, Fraud Advisory Panel has set up a COVID-19 fraud watch group – a cross-sector and a cross-industry coalition of trusted partners (including the Cabinet Office and the City of London Police) who meet weekly to share information on emerging fraud threats and trends affecting business. The panel aims to act as a conduit to warn the public, private and third sectors about COVID-19 fraud risks.

ACFE, a leading Association of Certified Fraud Examiners, is also actively contributing to anti-fraud society during these unprecedented times: “To illuminate the global pandemic’s impact on the fight against fraud, the ACFE is undertaking a series of benchmarking surveys exploring how fraud risks and anti-fraud programs are changing in the current environment. The September 2020 edition of the Fraud in the Wake of COVID-19: Benchmarking Report summarizes the results of the second of these surveys, which was conducted from late-July to mid-August 2020″.

Recently, the second edition of this study was launched, which indicates that the level of fraud has increased since May 2020 and is expected to continue rising. The following points were uncovered by ACFE:

• 77% of survey participants have seen an increase in the overall level of fraud as of August, compared to 68% who had observed an increase in May.

• 92% expect the overall level of fraud to continue increasing over the next 12 months (48% expect this increase to be significant).

• The top fraud risks, based on both current observations and expected increases, are 1) cyberfraud, 2) unemployment fraud, 3) payment fraud, and 4) fraud by vendors and sellers.

• 38% expect an increase in their overall anti-fraud budgets over the next year, while 14% expect a decrease.

• A notable majority (68%­–76%) say that preventing, detecting and investigating fraud are more difficult now than before COVID-19.

• An inability to travel is still the most significant challenge in combating fraud right now., but more people are citing conducting remote interviews as a current top challenge for them, moving this up to the No. 2 spot.

These findings indicate that the fraud risk is rising during these times and it’s the best time for organisations to embrace the risk and strengthen their risk management processes and procedures. If you don’t know how, contact us – our experts are skilled at fraud risk management solutions and investigations. CRI® Group’s global team of Certified Fraud Examiners (CFEs) are highly trained in uncovering fraud. From cases including money laundering, embezzlement, cash theft, asset misappropriation, bribery and corruption, contract and procurement fraud, our investigators have seen it all – and they have helped organisations around the world get to the bottom of suspected cases of fraud. Get in touch and let us know how we can help!

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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, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider.

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 BS 102000:2013 and BS 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 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, Anti-Money Laundering (AML) and ISO 37001:2016 Anti-Bribery Management Systems.