Intelligence Tech to Play Key Role in Tackling Employee Fraud

Intelligence software will play a vital role in helping large organisations clamp down on employee fraud, said the UK’s leading provider of the technology.

Under new UK anti-fraud legislation coming into force today, an organisation will be liable where a specified fraud offence is committed by an employee or agent, for the organisation’s benefit, and it did not have reasonable fraud prevention procedures in place. For prosecutions under the Failure to Prevent Fraud (FtPF) offence, it does not need to be demonstrated that company bosses ordered or knew about the fraud.

FtPF also has ‘extraterritoriality’, which means businesses incorporated overseas can be prosecuted under the legislation if an employee commits an offence while on UK territory.

Visual analysis software tools, used widely in the armed forces, law enforcement and anti-terrorism, can help organisations comply with the new regulatory demands by strengthening their internal fraud prevention policies and procedures, said i2 Group.

Fraud currently accounts for 41% of all criminal activity in the UK, rising sharply by some 1,400% over the last decade, according to the Office for National Statistics. The types of fraud that fall under the scope of FtPF focus specifically on larger organisations with 250+ employees, a £36 million turnover, or £18 million in assets, and they include:

• Fictitious revenues
• Understating expenses
• Dishonest selling practices
• Fake accounts
• Concealing critical information

A lack of alignment between departments internally is often making it easier for employees, agents or subsidiaries to commit fraud, said Gavin Shepheard, Executive Vice-President of i2 Group.

Shepheard said: “Fraud prevention is no longer a best practice; from today it becomes a legal obligation. As large organisations adapt to the requirements, visual analysis technology offers a practical, scalable and intelligent way to meet these challenges head-on.

“Businesses that invest in these technologies will not only mitigate legal risk but also protect their reputations, stakeholders and bottom lines.”

Effective fraud prevention typically requires coordinated action across compliance, finance, operations and IT departments. In many cases, however, these different stakeholders operate in silos, making it much easier for fraudsters to go undetected. “Given that the new law focuses on corporate failings, it’s imperative that large organisations strengthen their internal controls,” said Shepheard.

Visual analysis software, such as i2 Analyst’s Notebook, will be a vital tool for these organisations because it can manage complex reams of data and translate the information into insights they can act upon. “The software is well placed to detect fraudulent activity so it will play an important role in helping organisations respond effectively to the legal requirements,” said Shepheard.

Visual analysis software can help combat fraud by:

• detecting suspicious activity in real time - by mapping relationships and transactions visually, businesses can rapidly identify outliers and unusual patterns, such as fictitious revenues, understated expenses or fake accounts
• uncovering hidden connections - fraud schemes often involve complex networks and shell entities. Visual link analysis enables teams to trace hidden connections across accounts, territories and individuals, bringing greater clarity to data than traditional spreadsheets
• enhancing collaboration - visual tools allow different departments to interpret data consistently and because this also can encourage key stakeholders to align their activities, it delivers more effective results
• supporting regulatory reporting - many software platforms can integrate seamlessly with case management systems, simplifying the creation of audit trails and reports required for regulatory compliance

For more information about i2 Analyst’s Notebook, visit https://i2group.com/solutions/i2-analysts-notebook