Case Studies

Fraud conference digest

by Mark Rowe

Counter-fraud is about more than collaring fraudsters, the third annual conference by the charity the Fraud Advisory Panel, Insol Europe and the insolvency professional body R3 showed, writes Mark Rowe.

After a welcome by Panel deputy chair Frances Coulson, came a talk on the theme of the day, ‘trust in short supply; addressing the integrity deficit’, by Priya Giuliani, a partner in financial crime, fraud and investigations at Guidehouse. She spoke about how to use behavioural science, to bridge the gap in workplaces between good intentions (that most people have) and good actions. She told an amusing and telling story that threw light on social norms: a parent was called to see their child’s head teacher, to be told that the child had been stealing other children’s pens. The parent was horrified and told the child later that it was wrong to steal. ‘If you need pens, just ask me,’ the parent said, ‘and I will get them from work.’

The audience laughed, at the moral of the story; it is indeed wrong to take what isn’t ours, but does that extend to office stationary? Taking stationary may be a social norm, the unspoken definitions of what’s appropriate. While ‘tone from the top’ is important, leaders need integrity themselves, and is the CEO more than a name to an employee on the office floor? There, the middle management and line managers may act as a ‘permafrost’, she suggested, giving different messages than the ‘tone from the top’ ones. Besides, as she added, performance management processes (that line managers are in charge of) and sals targets may take on lives of their own. When targets are set, are Compliance and HR around the table?

In regulated industries such as finance, staff may have to take lengthy training; but people can forget much of it. How, she asked, to make learning (or perhaps e-learning) ‘sticky’, so that learning about compliance is retained (and applied), when the moment comes to choose between doing something that’s right or wrong? Such as, declaring a gift or hospitality, or sharing it around the office at Christmas. How to address such an ‘integrity gap’? She ended with the thought that integrity is like a muscle; you have to keep training it, to be strong.

Pictured is the fine Dorchester Library inside the venue, the Royal College of Physicians beside Regents Park in central London, during the final session of the morning, about how some jurisdictions encourage business owners to move assets from one corporate shell to another, leaving debts behind; the speakers were Jennifer Maughan, senior counsel at Walkers, and Marine Simonnot, partner at UGGC Avocats; chaired by Bart Keynickx, counsel at Altius.

After lunch, Becky Holmes, the author of ‘Keanu Reeves is not in love with you’, was due to speak about romance fraud. As was aired in the morning, her book highlighted how fraud will not only have a financial impact (lost savings, even life savings) but an emotional one (just as scammed investors may have had their trust in someone abused, so someone who’s fallen in love with someone online and given them money, only to be tricked, may find it hard to trust again). She was unable to attend, so the veteran counter-fraud academic Prof Mike Levi stood in.

Also topical was the session on ‘lessons from the Becker trial’, the 2022 trial at Southwark Crown Court, of former tennis player Boris Becker, convicted of four counts against the Insolvency Act 1986. He was released and deported after serving eight months of a 30-month jail sentence. Julian Cahn, partner at Stephenson Harwood; barrister Rebecca Chalkley, standing counsel to the Insolvency Service; and Mark Ford, partner at Evelyn Partners, talked the audience (largely of lawyers and auditors besides some from the likes of consultancies Kroll and Control Risks) through the implications for other sporting celebrities, and for the counter-fraud and insolvency sectors. Separately, among the morning speakers was Dave Magrath, who joined the Insolvency Service last year as director of investigation and enforcement services.

Another thread running through the day was how the Companies House regime for opening and closing companies simply and cheaply in the UK is exploited by criminals; an update on reforms to that regime was given by Matt Pennell, head of intelligence, and Lee Robins, senior enforcement service manager at Companies House, in conversation with Alan Bryce, the interim head of the Panel.

The day closed with a session about trust and integrity, airing whether or how trust in institutions, professions and across society has been eroded, and what to do about it; by a panel of TJ Abernathy, of Asset Reality; Arun Chauhan, partner at Tenet Compliance, and Dr Ian Peters, director of the Institute of Business Ethics.

The day taught that fraudsters and scammers are agile and play on any human emotion – whether charitable feelings after any natural or man-made disaster (the Panel brought out a report on fraud against the charity sector in December) or greed (‘get rich quick’ schemes, including some that will exploit public interest in saving the environment). Also, fraudsters will latch on to any loophole, whether covid furlough and ‘bounce back loan’ schemes, or to carry out ‘eco fraud’ by defrauding the regime of recycling credits, or by doing ‘traditional’ frauds in the recycling sector.

Yet arguably most intriguing of all was the session on fraud in the metaverse. Given that luxury brands and other businesses, notably the likes of Facebook (renamed Meta) are entering the metaverse of virtual and augmented reality and looking to monetise it, criminals too will look to make money there, whether by laundering money in crypto-currencies, or selling counterfeit digital brands, in breach of intellectual property laws. What’s law enforcement doing about that space; and if you come across crime in the metaverse, or even someone harassing you or urging you to hate crime, where do you report it to?

More in the May print edition of Professional Security Magazine.

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