Employee fraud has devastating consequences and will cripple a business from the inside out. No one wants to believe their employees are capable of such deception. Regardless, banks must be equipped to handle criminal employee fraud, and have the necessary safeguards in place to reduce the threat.
Unfortunately, an alarming number of employee fraud is committed by senior employees. These bad actors use their longstanding tenure to protect themselves from scrutiny. If left unchecked, it will cost revenue, reputation, and spread negativity and discouragement throughout the entire organization. It’s a sobering fact, but a rigorous training program can help mitigate the risks.
As the COVID-19 crisis ushers in a new era of work, it’s important to revisit best practices in order to eliminate fraud and protect your business. Implementing an anti-fraud training program can empower your employees to spot fraud attacks and reduce criminal fraud losses.
The Ugly Truth of Fraud
Those who commit fraud are well-versed in the methods of detecting fraudulent activity. This makes identifying and catching them that much harder. However, it is possible to take action against these kinds of attacks, and anti-fraud training is an essential first step.
You can personalize the idea of fraud by reminding employees that their actions will always have consequences. The effects aren’t limited to just one person or one aspect of the company. All fraud results in:
- Lost resources
- Decreased productivity
- Lower morale
- Unnecessary investments of time and money in the ensuing investigation
- A hit to the company’s reputation
- Possible financial and criminal consequences
Individuals who believe they can get away with the crime will be more likely to take the risk. You need to impress on employees that criminal wrongdoing will result in termination and possible prosecution. Provide them with real-world examples of past criminals who were caught and punished to help reinforce the severity of the situation.
By turning your employees into anti-fraud experts, you narrow the playing field and bring awareness to a growing problem. You shed a light on dishonest activities, and give fraudsters less opportunity to operate in the shadows.
Key Elements to Consider
An effective anti-fraud training program identifies acceptable and unacceptable behavior. The content should cover who perpetrates fraud, how to identify fraud, and the resulting shockwave that will hit your organization.
Two main principles to implement in your anti-fraud training program are consistency and repetition. As with any educational effort, the more exposure employees receive, the more the information will resonate and stick.
You can conduct training across numerous channels, from an in-person “classroom” setting, to a recorded video. Regardless of the format, you should tailor the training to your institution, and real-life examples brought into the discussion. Use your organization to speak honestly about specific concerns and how employees might take advantage of their positions to commit fraudulent activities.
Also, remember that there should be a separate training module targeted at managers within the organization. Managers and employees have different responsibilities. As such, training should be personalized with these roles in mind.
User activity tracking can be a helpful way for managers to respectfully keep an eye on what employees are doing, as well as the systems and personal information being accessed. Be aware of employees accessing customer data with no explainable business purpose.
How to Identify Fraud
As previously mentioned, employee fraud occurs at all levels of the organization. While it’s difficult to pin down the exact motivation behind someone’s actions, the ‘fraud triangle’ outlines the thought process as an employee:
- feels pressured to steal.
- sees an opportunity and acts on it.
- rationalizes the crime based on a past grievance against the company.
It’s important that you dispel the misconceptions surrounding what employees might believe a fraudster looks like. Instead, the focus should be on identifying warning signs. While not an immediate guarantee of fraud, you should note the following red flags and take them seriously:
- Employees living beyond their means
- Control issues or unwillingness to share duties
- Unusually-close relationship to vendor or customer
- Past employment-related problems
- Regularly complains about insufficient pay
- Past legal problems
This list isn’t exhaustive. However, you should train employees to spot these and other red flags, and to follow the proper channels to report suspicious activity. When you equip your employees with the necessary tools they need to detect fraudulent activity, you help safeguard your organization from attack.
We won’t win the war against fraud overnight. The sooner you take action against it, though, the better your chances of preventing it. With the implementation of an effective anti-fraud training program, you will educate and remind everyone that the threat of fraud can happen to any organization at any time.
The responsibility to take a rigorous stand against employee fraud falls on the shoulders of everyone in the company. True fraud prevention requires a united front.