Adele Whaley

+44 (0)1733 887744 awhaley@greenwoodsgrm.co.uk

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Fraud: The ever-present risk

Disputes / 18 November 2021

Financial crime, fraud and hacking have significantly increased during the Covid pandemic. In the past year, fraud and cybercrime have increased by around a third. It has also been estimated that UK losses as a result of fraudulent activities could be as high as £52bn each year. Fraud is big business and those involved in fraudulent activities are constantly evolving new techniques, often taking advantage of the growing reliance on technology.

Fraud can affect anyone, but companies are often targeted as they have the potential to provide a fraudster with a large payday.   Fraudsters are often unknown third parties, but can also take the form of employees who have identified a weakness in a companies’ internal procedures.

With fraudsters often being ahead of the game in terms of technology, the key question is what companies can do to try and protect themselves from fraud. We set out below some key areas to consider.

Educate your employees – it is imperative that businesses equip their employees with the right knowledge and skills to pick up on fraudulent activity as soon as possible. Companies should also consider educating employees so that they are aware of some of the most common tactics employed by fraudsters.

Have the correct policies in place – a companies’ internal policies should cover its position in relation to both fraud and theft. When a new employee is hired, these policies should be brought to their attention.

Have processes and procedures in place and ensure that they are kept under review – companies should ensure they have processes and procedures in place for monitoring fraudulent activity, which should be reviewed and adapted over time as fraudsters’ tactics are constantly changing and developing. In addition, procedures should be put in place to keep the risk of fraud occurring to a minimum. For example, it may be appropriate to have multi-level approval procedures in place before certain transactions can be carried out – a second pair of eyes could be invaluable!

Know your risk areas – for example, conveyancing solicitors will be on high alert to the risk of being targeted by fraudsters on a Friday – being the most common day on which property purchases complete and money changes hands.

Know your clients – as well as ensuring that the usual due diligence checks (including identification checks) are undertaken, take time to get to know your clients. This will make it easier to pick up on any changes in behaviour which could be an indication of fraudulent activities. For example, an unusual client request could be an indication that a fraudster has infiltrated the client’s emails and is trying to take advantage of your good relationship with that client. Also, always be wary of those who are unwilling to share basic information – they may well have something to hide.

Spot checks / regular internal audits – this is a good way to spot any potential fraud or theft inside a company. Audits should be carried out regularly, informally, and unannounced to prevent employees from trying to cover up any fraudulent activity. Internal audits should also look to assess the strength and effectiveness of existing procedures in preventing fraudulent activities.

Act immediately – as soon as you realise that a fraud is happening or has happened, the faster you act, the quicker and better the recovery may be.

If you have been a victim of fraud or simply need more advice to avoid becoming a victim, please do get in touch.

 

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This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. This update relates to the prevailing circumstances at the date of its original publication and may not have been updated to reflect subsequent developments. If you have general queries about our updates, please email: mailinglists@greenwoodsgrm.co.uk

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