I used these slides during a training session on fraud prevention, detection and investigation. This training was arranged by the Business School of the University of Leicester, hence, the branding of slides, etc.

1. www.le.ac.uk
Counter Fraud and Counter Corruption
Workshop, 5-6th March, 2015
‘Who cares about fraud and corruption and
what does it mean to us?’
Audrius Šapola
Regional Head of Security
Financial Services Industry

2. Visible fraud vs. invisible fraud

3. # Fraud is an umbrella term that covers
multitude of offences (Higson, 1999), lacks a
single definition and its nature is often broad
and complex (Gates & Jacob, 2009; Doig,
2006)
# Size and complexity of the industry (Smith,
Button, Johnston & Frimpong, 2011)
# Organizations are unaware about the extent
of fraud (Button, Gee & Brooks, 2012)
# Fraud can remain undetected for years (Smith
et al, 2011)
# If reported, tarnishes organization's
reputation (Higson, 1999)
# Senior management avoids being blamed
incompetent, etc. (FSA, 2003)
# Organizations might have low trust in the
process of criminal justice (Button, Lewis &
Tapley, 2009) or recoup fraud losses through
other means (Tunley, 2011)
# Police statistics and global fraud surveys are
of limited value (Gee, Button & Brooks, 2010;
Flemming, 2009)
Why Fraud Often Remains Invisible?

4. Four wise men and …a snake?

5. ‘Due to the nature of the financial
services market and the volume
of money that flows through the
sector it is inevitably going to be a
target for fraudulent activities and
utilized as a conduit for such
activities’
Wright (2012)
Is financial services industry vulnerable to fraud?

6. # Don’t share fraud data
# Don’t have the same fraud definitions
# Don’t share data on known fraudsters
# Tackling fraud is often given low priority
# Rarely share data on best practices
# Lack adequate training, qualifications or/and
resources for its counter fraud staff
# Finally, banking legislation doesn’t provide enough
guidance on how banks should deal with fraud
Financial Services Firms

7. Law Enforcement Agencies
# Often lack resources,
motivation and relevant
skills
# Do not always understand
banking products
# Often engage in “Blame the
victim” behavior
# Jurisdictional limitations

8. Bribery and corruption are even more hidden activities than fraud!

9. References
1. Button, M., Gee, J., & Brooks, G. (2012). Measuring the Cost of Fraud: An Opportunity for the New Competitive Advantage. Journal
of Financial Crime, 19(1), 65-75.
2. Button, M., Lewis, C. & Tapley, J. (2009). Fraud Typologies and the Victims of Fraud Literature Review, London: NFA.
3. Doig, A. (2006). Fraud, Devon: Willan Publishing.
4. Financial Services Authority (2003). Developing Our Policy on Fraud and Dishonesty. London: FSA.
5. Fleming, H. M. (2009). FSA’s Scale & Impact of Financial Crime Project (Phase One): Critical Analysis (OPS 57). London: FSA.
6. Gates, T. & Jacob, K. (2009). Payments Fraud: Perceptions versus Reality – a Conference Summary. Economic Perspectives, 33(1), 7-
15.
7. Gee, J., Button, M. and Brooks, G. (2010). The Financial Cost of Fraud. Milton Keynes: MacIntyre Hudson.
8. Higson, A. (1999). Why is Management Reticent to Report Fraud? An Explanatory Study. Retrieved from
https://www.fraudadvisorypanel.org/pdf_show.php?id=28.
9. Smith, G., Button, M., Johnston, L., & Frimpong, K. (2011). Studying Fraud as White Collar Crime. Basingstoke: Palgrave-Macmillan.
10. Tunley, M. (2011). Uncovering the Iceberg: Mandating the Measurement of Fraud in the United Kingdom. International Journal of
Law, Crime and Justice, 39(3), 190-203.
11. Wright, P. (2012). Policing and Regulating Financial Services. In A. Doig (Ed.), Fraud: The Counter Fraud Practitioner’s Handbook
(pp.43-57). Farnham: Gower Publishing Ltd.

10. Counter Fraud and Counter Corruption
Workshop, 5-6th March, 2015
‘Setting the Tone Throughout the
Organisation’
Audrius Šapola
Regional Head of Security
Financial Services Industry

11. Fraud prevention:
• Counter fraud policies
and procedures
• Risk assessments
• Counter fraud training
and awareness
• Vetting of staff,
customers and business
partners
The elements of fraud prevention framework
Fraud detection:
• Fraud monitoring tools
• Audits
• Incidents reporting
• Whistleblowing
Fraud Response:
• Incident investigations
• Loss recovery
• Disciplinary actions
• External investigations
• Lessons learned
British Bankers’ Association, 2007

12. ‘Fraud control – in any
profession – is a miserable
business. Failure to detect
fraud is bad news, and
finding fraud is bad news,
too’
Malcolm K. Sparrow (1998)

13. ‘The best way to get
management excited
about a disaster plan is
to burn down the
building across the
street’
Erwin, D., Security Manager, Dow Chemical Co.

15. Naive:
Organization is unaware of the need
to manage risks, processes are
reactive or repetitive, learning from
mistakes doesn’t exist
Novice:
Organization is aware of potential
benefits, but its either experimenting
with risk management or their
processes have fundamental
weaknesses
Normalized:
Management of risk is built into
routine business processes, the
benefits of risk management are
understood, but not consistently
achieved
Natural:
Organization has a risk-aware culture
with a proactive approach to risk
management in all activities, and
consideration of risk is inherent in all
processes
Risk maturity of your organization?
Hopkin, P. (2010)

16. The Fireman
Broadbent (2007)

17. The Policeman
Broadbent (2007)

18. The Knight
Broadbent (2007)

19. References
1. British Bankers‘ Association (2007). Fraud Manager‘s Reference Guide. London: BBA.
2. Broadbent, G. D. (2007). What Kind of Safety Leader are You? Retrieved from
http://www.transformationalsafety.com/documents/What_kind_of_Safety_Leader_are_you_NP.pdf.
3. Hopkin, P. (2010). Fundamentals of Risk Management. London: Kogan Page Ltd.
4. Sparrow, K. M. (1998). Fraud Control in the Health Care Industry: Assessing the State of the Art. Retrieved from
https://www.ncjrs.gov/pdffiles1/172841.pdf.