Unemployment Insurance Fraud During COVID-19

The Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury that collects and analyses information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes launched an Advisory on Unemployment Insurance Fraud During the Coronavirus Disease 2019 (COVID-19) Pandemic.

This advisory is aimed “to alert financial institutions to unemployment insurance (UI) fraud observed during the COVID-19 pandemic. Many illicit actors are engaged in fraudulent schemes that exploit vulnerabilities created by the pandemic. This advisory contains descriptions of COVID19-related UI fraud, associated financial red flag indicators, and information on reporting suspicious activity”.

We published recently that COVID-19 continues to affect businesses in a myriad of ways. Organisations are having to adapt quickly to the fast-changing climate of the pandemic, and unfortunately, we’ve recently noticed some business practices of cutting steps in a few internal processes, such as hiring, or lack of risk management controls. It’s a vulnerable time for organisations – earlier we wrote that a crisis can bring out the worst in some people. Fraudsters who prey on people’s fear and confusion tend to waste no time when a global pandemic strikes. COVID-19 is relatively new, yet fraud schemes are multiplied much like the virus itself as criminals look for vulnerabilities among a fearful population. This pandemic also creates risks for employee fraud – CRI Group’s survey revealed that nearly 77 percent of HR professionals accept that there is a risk that employees can initiate fraudulent activity because of the work-from-home arrangement.

But employee fraud might not be the only risk the organisations face today. Earlier this year, we published that some organisations commit fraud themselves and abuse the Coronavirus Job Retention Scheme by engaging in furlough fraud. They do this by accepting taxpayer money designed to help them pay salaries for furloughed workers, who are essentially “deactivated” due to loss of business and quarantine – yet they pressure them to work (or they accept furlough benefits without the employees’ knowledge).

As we can see, a fraudulent activity might happen in a myriad of ways. Let’s dive in what are the red flag indicators of unemployment insurance (UI) fraud as unemployment claims across the globe have surged due to the COVID-19 pandemic.[/vc_column_text][vc_hoverbox image=”8095″ primary_title=”> The Unseen Enemy: Explore Insurance Fraud in-depth with our eBook!” hover_title=”GET YOUR FREE COPY”]DOWNLOAD NOW[/vc_hoverbox]

What are the red flags of unemployment insurance fraud?

In the advisory, FinCEN lists the financial red flag indicators to alert financial institutions to fraud schemes targeting UI programs, and to assist them in detecting, preventing, and reporting suspicious transactions related to such fraud. The illicit activity might include employer-employee fraud-related activities, such as creating a fake company with fictitious employees and providing fabricated details such as wages, or conspiracy between the two parties when an employee receives UI payments while the employer continues to pay reduced and/or officially undisclosed salaries. The fraud scheme might also be happening under the ‘misrepresentation of income fraud’ when the applicant fails to provide the correct income/wage details, or even submits an application with stolen or fake identity information.

A similar case happened when the COVID-19 was in a full swing last year: one for-sale ad was published in the black-market specialising in selling stolen accounts and data – it was for access of the stolen UI claim in California that had been approved and offered benefits worth $17,550. This is just one example of the fraudulent activities – “in California, fraud was so pervasive that officials have suspended processing jobless claims for two weeks to put new controls in place and reduce a bulging backlog”. It also resulted in The U.S. Labor Department making fraud detection a priority and allocating $100 million to combat the issue. To support this fight against illicit activities, FinCEN identifies the following red-flag indicators:

  1. Account(s) held at the financial institution receive(s):
  • UI payments from a state other than the state in which the customer reportedly resides or has previously worked;
  • Multiple state UI payments within the same disbursement timeframe;
  • UI payments in the name of a person other than the accountholder, or in the names of multiple unemployment payments recipients;
  • UI payments and regular work-related earnings, via direct deposit or paper checks;
  • Numerous deposits or electronic funds transfers (EFTs) that indicate they are UI payments from one or more states to persons other than the accountholder(s);
  • A higher amount of UI payments in the same timeframe than similarly situated customers received.
  1. The customer withdraws the disbursed UI funds in a lump sum by cashier’s checks, by purchasing a prepaid debit card, or by transferring the funds to out-of-state accounts.
  2. The customer’s UI payments are quickly diverted via wire transfer to foreign accounts, particularly to accounts in countries with weak anti-money laundering controls.
  3. The customer receives or sends UI payments to a peer-to-peer (P2P) application or app. The funds are then wired to an overseas account, or withdrawn using a debit card, in a manner that is inconsistent with the spending patterns of similarly situated customers.
  4. Individuals quickly withdraw disbursed UI funds via online bill payments addressed to an individual(s), as opposed to businesses, as payee(s), with some individual payees receiving multiple online bill paychecks over a short time period.
  5. The IP address associated with logins for an account conducting suspected UI-fraud activities does not map to the general location of stated address in identity documentation for the customer or where the UI payment originated.
  6. Individuals direct UI-related EFTs, or deposit UI checks into suspected shell/front company accounts, which may be indicative of money mules transferring these funds in and out of the accounts.
  7. Multiple accounts receiving UI payments at one or more financial institutions are associated with the same free, web-based email account that may appear in more than one UI application.
  8. A newly opened account, or an account that has been inactive for more than thirty days, starts to receive numerous UI deposits.
  9. After a financial institution suspects UI fraud and requests additional identification documentation to verify the identity(ies) of the customer(s), queried individuals provide documents that are incorrect or forged, which may be an indicator of an account takeover or identity theft. After a financial institution suspects UI fraud and conducts due diligence, it determines that the customer does not have a history of living at, or being associated with, the address to which the UI check or UI debit card is sent, or within the geographical area in which the registered debit card is being used.

Read the full advisory here.

Insurance fraud is something that no company can afford. It is a serious crime that can result in serious consequences for fraudsters who may find their future job prospects impacted, find it harder to obtain insurance and other vital financial services, obtain a criminal conviction and even face the prospect of imprisonment. CRI Group’s insurance fraud investigations cover the full range of insurance fraud cases, from healthcare fraud to disability and even fake death claims. Our experts are trained to look for the tell-tale signs of fraud: they can view claims, medical and hospital records, conduct interviews, examine statements and documents, as well as perform on-site inspections.[/vc_column_text][/vc_column][/vc_row]

Enhanced risk management

At CRI Group, we suggest you consider looking at your overall risk management process, involving not only potential insurance fraud risks during the COVID-19 pandemic, but a broader range of employee, bribery and corruption, compliance risks your organisation might face.

The “Risk Management & ABMS Playbook” provides tools, checklists, case studies, FAQs and other resources to help you lead your organisation into better preparedness and compliance. Our experts share their own plays to help you reduce risk, thereby preventing and detecting more fraud. The first section addresses risk management directly: proper third-party due diligence and critical background screening take centre stage for this game plan. Section two tackles bribery and corruption, with tried-and-true measures you can implement to stay better protected and in compliance with strict laws and regulations.[/vc_column_text][vc_btn title=”GET YOUR FREE COPY NOW” link=”url:https%3A%2F%2Fcrigroup.com%2Fcase-study%2Frisk-management-abms-playbook%2F|target:_blank”][/vc_column][/vc_row]

Speak up – report illegal and unethical behaviour

If you find yourself in an ethical dilemma or suspect inappropriate or illegal conduct, and you feel uncomfortable reporting through normal channels of communication, or wish to raise the issue anonymously, use our Compliance Hotline. This hotline is available to all everyone in a business relationship with CRI Group and ABAC Group. It is an anonymous reporting mechanism that facilitates reporting of possible illegal, unethical, or improper conduct when the normal channels of communication have proven ineffective, or are impractical under the circumstances.[/vc_column_text][vc_btn title=”REPORT NOW” link=”url:https%3A%2F%2Fcrigroup.com%2Fcompliance-ethics-hotlines%2F|target:_blank”][/vc_column][/vc_row][accordion_father][accordion_son title=”Who is CRI Group?” clr=”#1e73be”]Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk ManagementEmployee Background ScreeningBusiness IntelligenceDue DiligenceCompliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management SystemsISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.[/accordion_son][/accordion_father][/vc_column][/vc_row]

The Unseen Enemy: Insurance Fraud – Part III

This three-part series of articles examines the problem of insurance fraud, including its pervasiveness and general characteristics in the United States, the United Kingdom and the world. Insurance fraud is a widespread problem that requires real solutions and is often difficult to detect and combat.

Part One of the series, “What is Insurance Fraud,” provides an introduction to a topic that is important for any business leader, insurance professional, compliance agent or fraud investigator. Part Two, “How do Companies Detect Insurance Fraud,” details red flags of insurance fraud that help tip off investigators to possible illegal behaviour. Part Three, “Anatomy of an Insurance Fraud Investigation,” provides a look at case studies and reveals key tips for handling a successful investigation. To receive the next series subscribe to our monthly newsletter here!

Taken as a whole, this series is the perfect primer for any insurance fraud professional and companies looking to avoid becoming victims of insurance fraud claims. It provides the tools and knowledge needed to effectively combat insurance fraud.

Part Three: Anatomy of an Insurance Fraud Investigation

The insurance fraud epidemic is of serious concern to businesses, insurance providers and consumers worldwide. In Part One of this three-part series, we examined the scope of the problem, and discussed a few cases that illustrate the magnitude of insurance fraud. In Part Two, we looked at how companies can detect insurance fraud, including how to recognise the red flags that represent potential criminal behaviour.

In this final Part Three, we’ll examine the elements of an insurance fraud investigation, beginning with a case study that illustrates how CRI Group’s insurance fraud investigators exposed fraud schemes – saving its clients thousands of dollars.

Case Study: Health Insurance Fraud

A CRI Group client requested an investigation of a health insurance claim filed by one of their employees, “Mr. Jones.” Mr. Jones claimed that while on an official visit to UAE from the U.S., he felt sudden abdominal pain with nausea and vomiting lasting 18 hours. He was admitted to a clinic and stayed under observation for two days, which cost him around $4,000 (US).According to the claim, Mr. Jones (name changed) was discharged from the clinic, but then felt the return of his sickness, so he was admitted to another clinic for two more days. During this time, he was kept under observation. For this second clinic visit, he was charged nearly $1,000.

As part of CRI Group’s “experts in a field” approach, a local investigator visited both of the clinics involved in the claim. One clinic was located in Dubai, while the other was in Abu Dhabi. When he arrived at the Dubai clinic, CRI Group’s local expert immediately learned that the clinic deals specifically in cosmetic surgery for women. In fact, as advertised on the outside of the clinic, its services are only for women. The clinic’s administrator confirmed that the clinic is only in the business of providing cosmetic surgery for women.

CRI Group’s local investigator then visited the clinic in Abu Dhabi. This clinic also appeared to be in the business of providing cosmetic surgery for women. When the local expert tried to contact the doctor who was named as the treating physician for Mr. Jones, the doctor was hesitant to meet the expert. CRI Group’s expert showed the report to the doctor, and though it was on the official letterhead of the clinic, the doctor first denied involvement in the case.

Later, the doctor told CRI Group’s expert that while “we don’t treat that kind of illness,” the patient “was in such bad condition that we treated him on a humanitarian basis.” Yet the doctor was hesitant to accept that the bills came from his clinic (the expert had already learned that the doctor in question was also the owner of the clinic). Regardless, CRI Group successfully secured the evidence that the health insurance invoices were fake and Mr. Jones was making false claims to get money from his employer.

 

When it’s Time to Open an Investigation

When red flags of fraud are uncovered, it’s time to begin an investigation. As you can see from the examples above, CRI Group’s investigations are based on a thorough approach that includes site visits and leaving no stone unturned. When you work with CRI Group, this is how the process will typically proceed. CRI Group will:

  • Assign the appropriate investigators with the right expertise in that area to investigate the claim.
  • Contact the parties involved to gather all relevant details about the incident.
  • Use all resources available, including police reports, court filings, database records and other means to establish the truth in insurance fraud cases.
  • Make site visits, speak to witnesses, take photos and establish timelines as needed to create a full, truthful story of the incident.
  • Uncover useful evidence, carefully documenting and preserving it in a way that is admissible in court.
  • Present investigation findings to the client, with recommendations on how to proceed. Sometimes, legal action is warranted.

Working with an insurance fraud investigation company like CRI Group provides the advantage of having an independent, impartial and unbiased third-party collecting the facts you need regarding any case that might involve potential fraud. CRI Group has been safeguarding businesses for more than 28 years, and you will be assured of the quality, professionalism and discreet nature of all investigations conducted by our experts.

Our global presence ensures that no matter how international your operations are, CRI Group’s investigations have the network needed to provide you all necessary support, wherever you happen to be. We take great care to ensure that our trained and licensed investigators are the best at what they do.

3 types of insurance fraud investigations

1.     Social Media Evidence

“Social media is an absolute gold mine” for insurance fraud investigations, according to Kelly Riddle, founder of private investigation company Kelmar Global. Many people think that setting high privacy settings on their social media accounts makes everything they post impossible to access. On the contrary, social media platforms usually hand over user information if they receive a subpoena for it.

Fraudsters often slip up online and post information revealing their fraud. For instance, someone receiving worker’s compensation for an injured foot may post a video of themselves playing soccer with their kids. Or, someone else may unintentionally expose their scheme, as is the case if friends and family tag the claimant in an incriminating post.

Fraudsters who are proud of their work may boast about it on social media, thinking they will never get caught. Make sure to search for alternate accounts as well as the claimant’s main social media pages to find as much of this type of evidence as you can.

2.     Activity Check

In order to learn everything you can about the claimant, you need to see where and how they live. Good old-fashioned surveillance of their home or workplace can provide evidence. For example, someone who has claimed compensation for a shoulder injury leaving their home with a tennis racket, that is possible evidence for insurance fraud.

While you are in the claimant’s neighbourhood, canvass others in the community. Even if the neighbours don’t know the person well, they may have observed their lifestyle. Ask about the insured person’s financial situation, which can indicate if they are in need of quick money.

In property insurance fraud investigations, be sure to also ask neighbours if they have seen or heard anything out of the ordinary around the time of the claim. This can include moving trucks or more comings and goings than usual from the claimant’s home. They can also help you determine whether or not the claimant is actually living in their home.

3.     Fake Documentation of the Claim

Just because a claimant has included all of the relevant documents in their claim doesn’t mean they aren’t committing insurance fraud. In fact, fake documentation is a very common way to pull off a fraud. Signs of false documents include:

  • An unusual number of receipts.
  • Falsified receipts.
  • Fake affidavits.
  • Photos or receipts used for more than one claim.

When studying accompanying documentation during an insurance fraud investigation, use a keen eye to spot signs of editing. Inconsistent lighting in photos and fonts that don’t match the rest of the document are some common examples. Be sure to also review the claimant’s history to see if they have claimed loss of the same items before

6 Keys to Successful Insurance Fraud Investigations

1. Follow the Law

Nothing can derail your insurance fraud investigation quicker than finding out you have conducted it in violation of the law. Every jurisdiction is different, and privacy laws are the major consideration in these types of investigations. Understand the laws regarding filming or recording a subject or a witness, as doing it without their consent might be a violation of their rights. This is where it is helpful to engage the experts. At CRI Group, our investigators are trained and knowledgeable about local laws and the importance of proper evidence collection. Avoid trying to collect information by deceptive means, such as “friending” a subject on social media.

2. Conduct an Initial Assessment

It’s important to gather the known facts of the case at the outset of your insurance fraud investigation: You need to have some idea of the who, what, when where, and how of the case. With your baseline facts in place, your investigation will proceed much more smoothly. Keep in mind that the subject of an insurance fraud investigation might work quickly to conceal or destroy evidence if they know they are under suspicion. You should make sure to immediately secure all documents and other evidence that you might need late in your investigation. If you are conducting the investigation for a client, make sure they follow proper security measures to keep evidence intact, especially when it comes to digital evidence.

3. Plan the Investigation Well

An effective investigation is one that is carefully planned. Failure to do so can cause problems from the outset, such as missing important details and evidence in the case, or running afoul of regulations such as reporting to FinCEN in the U.S. or FINTRAC in Canada. Before you start the investigation, think about questions like:

  • Who should be interviewed?
  • In what order should you conduct those interviews?
  • What supporting documents do you need to collect?
  • Are there any other allegations against the subject?
  • Which entities need to be informed of the investigation and how should it be done?

Carefully document all the details and steps taken during the case to make sure your insurance fraud investigation stays on track.

When engaging with CRI Group, a fraud investigator will be allocated to your case. Read more about their skills and expertise in our article “The role of a FRAUD INVESTIGATOR.”

4. Perform Great Interviews

This is where being an effective communicator comes into play. Most successful investigations include subject and witness interviews as a critical part of the evidence-gathering process:

  • You need to ask questions in order to find out the “how” and “why” an insurance fraud has occurred.
  • The best interviews are those in which the interviewer is in complete control, yet the subject or witness feels comfortable and undistracted. Have some general questions prepared, but engage the subject in a conversational style, and don’t hesitate to go “off-script” to learn more information.
  • Be friendly and establish trust and build rapport with the subject. Small talk is encouraged, plus warming up with some easy questions so that the interviewee feels comfortable talking to you.
  • Don’t ask “yes” or “no” questions. Instead, ask open-ended questions, such as “tell me about what you did that morning” or “what happened that day?”

5. Understand Evidence

During an insurance fraud investigation, and when reporting the results, an investigator should take care to separate his opinion from the facts of the case. The investigator should let the hard facts of evidence speak for itself in the case, rather than engaging in speculation or providing opinions on guilt or innocence. This is why proper evidence collecting and examination is so important. Files, documents and other evidence should be kept secure and chain-of-custody should be maintained. Never alter or mark up original documents or files with your own notes, even if they seem relevant. Keep copies for your files and make sure nothing slips through the cracks.

6. Report the Findings

When your investigation has concluded, it’s time to report the results. Prepare a thorough, facts-based report detailing the evidence and your findings. A good investigation report should include the following items:

  • Your understanding of the allegation (who, what, where, when, how)
  • The steps taken in the investigation
  • Copies of documents and other material evidence
  • A list of interviewees
  • A summary of interviews
  • A conclusion as to whether the allegation was substantiated or not

Write your report in objective language, avoiding judgemental or inflammatory adjectives when describing details of the case. Use as many direct quotations as possible from interviewees or documents. Only include facts, not opinions or inferences, in your report.

This three-part series of articles is part of our “The Unseen Enemy: Insurance Fraud” e-book. The e-book contains actionable advise on how to protect your business from insurance fraud and much more. Download the FREE e-book here!

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

The Unseen Enemy: Insurance Fraud – Part II

This three-part series of articles examines the problem of insurance fraud, including its pervasiveness and general characteristics in the United States, the United Kingdom and the world. Insurance fraud is a widespread problem that requires real solutions and is often difficult to detect and combat.

Part One of the series, “What is Insurance Fraud,” provides an introduction to a topic that is important for any business leader, insurance professional, compliance agent or fraud investigator. Part Two, “How do Companies Detect Insurance Fraud,” details red flags of insurance fraud that help tip off investigators to possible illegal behaviour. Part Three, “Anatomy of an Insurance Fraud Investigation,” provides a look at case studies and reveals key tips for handling a successful investigation. To receive the next series subscribe to our monthly newsletter here!

Taken as a whole, this series is the perfect primer for any insurance fraud professional and companies looking to avoid becoming victims of insurance fraud claims. It provides the tools and knowledge needed to effectively combat insurance fraud.

Part Two: How Do Companies Detect Insurance Fraud?

The insurance fraud epidemic is of serious concern to businesses, insurance providers and consumers worldwide. In Part One of this three-part series, we examined the scope of the problem, and discussed a few cases that illustrate the magnitude of insurance fraud. In Part Two, we answer the question: How can companies detect insurance fraud cases before they do irreversible damage? Working with the right experts, any company can be better protected and detect more insurance fraud.

CRI Group’s expert insurance fraud investigators have the experience and training to help business leaders identify the red flags of insurance fraud, alerting them to

The following are 6 red flags of Insurance Fraud that CRI Group’s investigators are trained to recognise:

1. Suspicious timing

Sometimes a claim is made very shortly after the inception of the policy, such as within months, weeks or even days after the insured has been enrolled. This is an obvious red flag, yet it happens more often than you’d think. Another similar tip-off to potential fraud is when the insured makes a claim soon after an increase or change in the coverage. For example, a motorist increases their auto coverage from liability to collision insurance, and soon after files a claim under their collision policy when their car is “totalled” in a one-vehicle accident. An investigator from CRI Group would certainly look deeper into the circumstances of the claim.

2. Frequent insurance claims and losses

We often hear that “some people are just unlucky.” That may be true, but a string of alleged bad luck that results in frequent insurance claims and payouts can signal that there is more than meets the eye. CRI Group is trained to look at the history of every claimant and uncover potential fraudulent actions. Some insurance fraudsters think they can avoid detection by filing their claims in totally different areas, like auto, health and homeowners’ insurance. Expert investigators know how to put those pieces together to look for trouble signs.

3. Sketchy details

Sometimes a claim for theft or fire will be for recently purchased and/or expensive property, without a lot of documentary evidence to back up the claim. That’s a red flag, along with when an insured cannot remember, or does not know, where the claimed property was acquired, or cannot provide adequate descriptions. A proper insurance fraud investigation will seek to corroborate the details of the claim, and require an examination of all supporting documentation to make sure it is complete and legitimate.

4. Details that are “too perfect”

On the other hand, sometimes the details surrounding a claim seem perfect – a little too perfect. CRI Group has investigated cases in which the insured had receipts and other documentation, witnesses, and duplicate photographs for everything. So what’s the problem? Things lining up a little too perfectly can tip off an investigator that things have been planned and orchestrated, and there might be fraud involved. That’s when it’s time double-check the documentation carefully, and interview witnesses to verify the facts.

5. Irregular documentation

We’ve discussed the importance of documentation in the investigation of a claim – whether it might be missing, or seems to be “too perfect.” But sometimes the documentation provided by the insured is irregular or questionable, which is another red flag of insurance fraud. CRI Group’s investigators look for issues with documentation such as:

  • Numbered receipts from the same source, but are dated differently or sequentially.
  • Altered documents, including receipts or invoices with dates or amounts changed.
  • The insured provides only photocopies of documents, instead of originals.
  • Similar handwriting or signatures on different documents that are purportedly from different sources.
  • Errors, such as miscalculated sales tax, or name and address misspellings, etc.

These are just a few of the issues that experts are trained to look for, and they know how to read the warning signs in the documentation that a layperson might overlook.

6. Financial difficulties

Most of us have run into financial trouble at least once or twice – overextended credit, bad investments, perhaps an ill-advised purchase. The problem is that some individuals, whether out of desperation or greed, will resort to fraud to try to straighten out such financial difficulties. CRI Group’s fraud investigators are careful to look at all aspects of a claim. Did the insured recently take a financial loss? Did they declare bankruptcy, or go through a costly divorce? These red flags become especially important when paired with one (or more) of the other red flags discussed in this article. Investigators must be vigilant, as financial pressure is one of the leading contributors to fraud.

What comes next?

Insurance fraud cases cover a wide range of schemes and crimes, and the red flags described above are just a few of the issues that insurance fraud investigation companies are trained to look for and uncover in the course of an investigation. In part three of this series, we will examine how CRI Group’s insurance fraud investigators proceed when such red flags lead to fraud, and it’s time to launch an investigation. CRI Group’s investigations cover the full range of insurance fraud cases, from health care fraud to disability and even fake death claims, always with the goal of providing the best resolution for our clients.

Are you interested in the next series? This three-part series of articles is part of our “The Unseen Enemy: Insurance Fraud” ebook with actionable advise on how to protect your business from insurance fraud and much more. Download the FREE ebook here!

The Unseen Enemy: Insurance Fraud | Mock Up 1

 

 

 

 

 

 

About CRI Group

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Sources & Credits

  1. LexisNexis Legal Newsroom, titled “Insurance Fraud – Red Flags.” https://www.lexisnexis.com/legalnewsroom/insurance/b/insurance-law-blog/archive/2008/05/16/insurance-fraud-_2d002d00_-red-flags.aspx
  2. Property Casualty 360, titled “10 red flags that could signal a fraudulent Auto claim.” https://www.propertycasualty360.com/2016/03/16/10-red-flags-that-could-signal-a-fraudulent-auto-c/?slreturn=20180306103605

The Role of a Fraud Investigator

Fraud investigators are the front line of establishing the facts of suspected fraud or other unethical business behaviour. A fraud investigator’s skillset and wide knowledge of fraud laws, evidence gathering and interviewing make them the go-to expert for investigating insurance fraud, financial fraud, procurement fraud, asset recovery, cyber fraud, healthcare fraud, retail fraud and other areas.

A fraud investigator can either be part of a team of experienced investigators, or the leader of such a team. If part of a team, the fraud investigator generally works with the other team members to handle reports of suspicious activity. If in charge of a team, the fraud investigator would typically report to the head of a department, such as corporate security, compliance or audit. A fraud investigations manager at a typical retail business, for example, would be responsible for the day-to-day monitoring, investigation and resolution of fraudulent activity relating to delays in the repayment and refunds processes. They will take the lead on the implementation of strategies to prevent fraud and financial crime, thereby mitigating risk to the business.

Fraud Investigator Key Functions

Fraud investigators provide subject matter expertise on claims and associated fraud risks, helping to ensure effective resolution of investigations. The effective fraud investigator adheres to relevant security standards, internal and external procedures and legislative requirements. Their role often involves developing and maintaining close working relationships with relevant law enforcement agencies, ensuring that cases are developed and prosecuted to a criminal standard.

When working with an organisation in a preventative fashion, a fraud investigator will perform fraud risk assessments across the business relating to both external and internal threats; implementing mitigation measures as required. They also build appropriate fraud prevention and detection processes and implement them. Some fraud investigators manage the day-to-day operation of an expanding fraud team, ensuring that KPIs are met and regular reports produced for the management team. In this capacity, they will also work closely with the senior management team to ensure that operational capacity is correctly aligned to combat a variety of fraud types.

Here are some of the other key functions performed by fraud investigators:

  • Evaluate potential fraud indicators and the impact of current fraud trends and make recommendations as to appropriate mitigation.
  • Conducting investigations into allegations of fraud, waste or abuse committed by clients against our company
  • Reviewing and researching evidence/documents to analyse the overall fact pattern of a claim and synthesise data into a professional report with recommendations
  • Preparing and coordinating field assignments to obtain relevant evidence and information
  • Conduct objective, fair, thorough, unbiased and timely investigations into allegations of fraud, waste or abuse committed by clients against our company
  • Review and research evidence/documents to analyse the overall fact pattern of a claim and synthesise data into a professional report with recommendations
  • Prepare and coordinate field assignments to obtain relevant evidence and information
  • Coordinate with defence attorneys to provide deposition strategies and use law enforcement resources for assistance
  • Manage and prioritise a large and varied caseload effectively and efficiently to achieve positive results
  • Prepare prosecution packages and restitution proposals.

Responsibilities

As a fraud investigator often wears many different hats, they also have many ongoing responsibilities. These include monitoring transaction reports to identify any suspicious transactions and conducting detailed investigations as required. They must also proactively identify financial crime trends through data analysis and share findings with leadership as and when needed. A few other responsibilities of a fraud investigator include:

  • Working to a high standard, meeting strict time-frames whilst working under pressure.
  • Communicating directly with customers as part of ongoing fraud investigations through in-app messages or via telephony with potential victims of fraud to establish circumstances and additional information, before providing a fair and logical decision, with supporting rationale.
  • Work as part of a team and supporting colleagues as and when required to reduce workload(s).

Personality Traits of a Fraud Investigator

There are some common traits among the most successful fraud investigators. This includes being a self-starter who is results-driven with high levels of self-motivation, energy and initiative. An effective fraud investigator has a proven ability to work under pressure to and meet tight deadlines, without compromising the quality of output. One key trait that can’t be overlooked is the ability to be an effective communicator – a fraud investigator must have excellent written and verbal skills. Here are some other key traits among successful fraud investigators:

  • An ability to thrive under pressure amidst changing business priorities
  • Effective cost management and analytical integrity
  • Experience in leading and developing a team
  • Keen interest in stopping fraud whilst considering the impact of how an investigation can impact customers

Knowledge and Skills

A successful fraud investigator brings to the table a broad range of security/ fraud detection and prevention experience. A fraud investigator must be a subject matter expert on fraud for their related field, such as insurance fraud, financial fraud, procurement fraud, asset recovery, cyber fraud, healthcare fraud, retail fraud and other areas.

Many fraud investigators have specialised skills such as:

  • Experience of interviewing in accordance with the Police and Criminal Evidence Act following the PACE framework.
  • Strong knowledge of cyber risk and common fraud typologies, along with the emerging trends affecting fraud and financial crime.
  • Familiarity with key AML, TF, Financial Crime and Sanctions legislation and associated Regulatory Guidance.
  • Demonstrated experience working with customers on fraud prevention and detection strategies.
  • Sound understanding of the customer impact of a transaction monitoring system; able to balance fraud prevention with the need to provide an excellent customer experience.

As previously mentioned, an effective fraud investigator must have strong interpersonal and communication skills, including the ability to interact with clients, upper management and law enforcement. They also need to have an ingenuity and persistence to obtain case information not readily available with an eye for detail. Dealing with various different cases and different types of evidence requires strong organisational skills. For insurance fraud, investigators must be proficient with the insurance procedures, regulations and investigation methods

Perhaps most important, fraud investigators must set a positive example for their colleagues. They need to be honest and ethical, with high levels of integrity and confidentiality.

A fraud investigator has many different responsibilities, and the role requires an individual with some specific traits. CRI Group’s fraud investigators are experts at uncovering the facts and evidence of a case, but they also implement proactive anti-fraud measures to help an organisation be better protected against future incidence of fraud. Fraud investigators specialise in insurance fraud, financial fraud, procurement fraud, asset recovery, cyber fraud, healthcare fraud, retail fraud and other areas. It’s important that organisations hire trained, qualified fraud investigators who understand the laws, are effective at evidence collection and fact-finding, and are good communicators (since interviewing is one of the key processes of fraud investigation). A fraud investigator might work with a team, or they might lead their team and report to another division. Being able to work under pressure and meet deadlines is critically important. Properly evaluating and securing evidence is of equal importance. CRI Group has only the best expert fraud investigators to meet these challenges.

Are you a fraud investigator? Tell us about your day-to-day job, we would love to hear it.

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

 

 

 

The Unseen Enemy: Insurance Fraud – Part I

This three-part series of articles examines the problem of insurance fraud, including its pervasiveness and general characteristics in the United States, the United Kingdom and the world. Insurance fraud is a widespread problem that requires real solutions and is often difficult to detect and combat.

Part One of the series, “What is Insurance Fraud,” provides an introduction to a topic that is important for any business leader, insurance professional, compliance agent or fraud investigator. Part Two, “How do Companies Detect Insurance Fraud,” details red flags of insurance fraud that help tip off investigators to possible illegal behaviour. Part Three, “Anatomy of an Insurance Fraud Investigation,” provides a look at case studies and reveals key tips for handling a successful investigation. To receive the next series subscribe to our monthly newsletter subscribe now!

Taken as a whole, this series is the perfect primer for any insurance fraud professional and companies looking to avoid becoming victims of insurance fraudulent claims. It provides the tools and knowledge needed to effectively combat insurance fraud.

Insurance Fraud Consequences Around the World

Fraudulent claims costs an estimated $40 to $80 billion per year in the U.S. alone. According to Cifas, the UK’s leading fraud prevention service, members report a 27% rise in false insurance claims across the UK in the past year, with spikes in household and motor insurance. Cifas members also reported the following:

  • Household insurance fraudulent claims have increased by 52%, with claimants aged 31-40 the biggest culprits
  • motor insurance fraudulent claims have increased by 45%, with 21-30 year-olds making up the largest group
  • Fronting insurance is on the decline overall, however the share of millennials (21-30 year-olds) committing the offence increased by 18% in 2018.

Fraudulent claims are deliberately undetectable, therefore it’s hard to place an exact value on the money stolen. According to Alfred Manes’ “Insurance Crimes” in the Journal of Law and Criminology, the official number of cases does not correlate with the reality. The Coalition Against Insurance Fraud Annual Report estimates that a total of about $80 billion was lost in the US in 2006. 

  • Insurance Information Institute estimates that the insurance fraud accounts for about 10% of the property insurance industry’s incurred losses and loss adjustment expenses.
  • The National Health Care Anti-Fraud Association’s “The Problem of Health Care Fraud” estimates that 3% of the health care industry’s expenditures in the U.S. are due to fraudulent activities, amounting to a cost of about $51 billion.
  • David A. Hyman writes in “Health Care Fraud and Abuse” estimates that 10% of the total healthcare spending in the US to fraud—about $115 billion annually. 

Consider these statistics:

  • According to Federal Bureau of Investigation’s “FBI — Insurance Fraud,” non-health insurance fraud costs an estimated $40 billion per year – consequently this increases the premiums for the average U.S. family between $400 and $700 annually. 
  • J.E. Smith’s book “The Trillion Dollar Insurance Crook” puts the true cost fraud committed in the US at 33% to 38% of the total cash flow through the system
  • In the UK, the Insurance Fraud Bureau estimates that the loss due to insurance fraud is about £1.5 billion ($3.08 billion), causing a 5% increase in insurance premiums
  • Insurance Bureau of Canada “Cost of Personal Injury Fraud” estimates that personal injury fraud costs about C$500 million annually.
  • “Indiaforensic Study on quantification of fraud losses to Indian Insurance Sector” estimates that Insurance frauds in India costs about $6.25 billion annually.

Part One: What is Insurance Fraud?

It’s been called an epidemic and is a scourge of insurance providers, private companies and consumers alike. But what is it, how do companies detect it, and how does an insurance fraud investigator unravel it? In this part one of a three-part series, we will address the first question: What is insurance fraud?

Most of us deal with insurance in various forms throughout our lives. It’s a necessity in some cases through which we pay regular premiums in order to be protected from damages or liability from an unknown future event, such as an accident or illness. For large corporations, insurance can be worth millions, covering things like product liability, workers’ compensation, business interruption and other serious risks. It’s also rife for fraudsters, who often live by the well-known maxim, “follow the money.”

Don’t have time to read the rest?

Taken as a whole, this ebook is the perfect primer for any insurance fraud professional and companies looking to avoid becoming victims of insurance fraud claims. It provides the tools and knowledge needed to effectively combat insurance fraud.

Download your Insurance Fraud Investigations FREE ebook here!

Every type of insurance is vulnerable to insurance fraud. This type of cases can be committed by opportunists – consider claim fraud, where perpetrators invent or exaggerate a claim; or application fraud, where they deliberately or recklessly provide false information when applying for insurance. There are well-known fraudulent insurance claim cases of highly organised criminal gangs with money-making enterprises based on motor-vehicle fraud or health care fraud, for example. But fraud can happen at any point along the process of an insurance claim, by insurance applicants, members/policyholders, third-party claimants or others (including professionals who specialise in pursuing claims for policyholders).

Fraudulent claim cases also cover a wide range of schemes and crimes. The following are some of the most common types of fraud involving the insurance industry, according to the ACFE’s “Insurance Fraud Handbook”:

  • Agent and broker schemes
  • Underwriting irregularities
  • Vehicle insurance schemes
  • Property schemes
  • Life insurance schemes
  • Liability schemes
  • Health insurance schemes
  • Worker’s compensation schemes

Fraudsters find new ways to pull off their scams, from simply falsifying claims to engaging in mail fraud, identity theft, and forgery, they will make it happen. For example, when looking at just motor vehicle-related fraudulent claims, the types of schemes include the following:

  • Vehicle dumping or destroying
  • False registration
  • Exaggerated repair costs after a car accident
  • Faulty airbag replacement
  • Faulty windshield replacement

All of the above is intended to enrich the fraudsters at the expense of insurance providers, and, in some cases, other innocent victims. People have even been injured in schemes that involved faked traffic accidents for the purpose of insurance fraud.

Who is Involved?

Often committed by someone directly connected to the insurance policy. This includes the policyholder, applicant and their beneficiaries. However, insurance insiders – i.e. brokers and agents- as well as gatekeepers – i.e. lawyers and accountants, could be behind the scheme. They collude with the policyholder in exchange for a portion of the profits or victimize the policyholder for their own gain. Examples include:

  • A doctor submitting improper medical coding to receive a higher payment than they are entitled to.
  • A mechanic fabricating a bill for more repairs than the car required after an accident.
  • A private investigator not really doing the investigation on fraudulent behaviour.
  • An attorney was helping a claimant fabricate a story about how they hurt themselves on the job so they can receive worker’s compensation.

When times are tough for them financially, people are more likely to commit insurance fraud. You can sometimes discover opportunistic fraud by interviewing the alleged fraudster’s friends or neighbours about their financial situation.

Case Study: The ‘Phantom Collision’ Ring

In 2014 in Los Angeles, a ring of over a dozen insurance fraudsters was busted for fraudulent collision claims. The perpetrators of the frauds recruited family members and friends to help orchestrate fake accidents, ultimately stealing more than $300,000 from auto insurance companies before they were caught.

In some cases, the collisions didn’t even happen at all. All it took were willing participants to make claims in coordination with repair and auto body shops to make the fraudulent claims. In the end, fraud investigators were able to detect a pattern to their claims, helping them unravel the scheme.

The case is reminiscent of a similar instance that made shocking headlines in 1996 when an organised crime ring (also in L.A.) made up of six perpetrators netted a jaw-dropping $20 million in phoney claims. When they were caught, it was discovered that they had staged more than 100 fake accidents, filing $10,000 to $20,000 in claims per incident. For many people who read about the case in the newspapers, it was their first exposure to something of this magnitude, whereas they had previously thought of insurance fraud cases as “one-off” crimes of opportunity.

Case Study: Doctors, Clinics Get in on Insurance Fraud in New York

Healthcare fraud is another area that is susceptible to major fraud conspiracies. Last year in New York City, more than 20 people and more than a dozen corporations were charged in a massive scheme to defraud Medicaid, Medicare and other insurance providers. The operation was so sophisticated; it allegedly involved “office staff, recruiters, managers, billers and money launderers.”

As is common with such cases, the fraudsters targeted poor and vulnerable people to help them execute the fraud. They went into low-income areas and in some cases approached homeless people, offering them cash ($30 to $40) in exchange for them going into clinics that were in on the scheme and ordering unnecessary tests. In many cases, the tests weren’t even performed, and the “patients” didn’t even have a consultation with a doctor.

The massive fraud included doctors and utilised shell companies to help launder the millions of dollars that were processed by the perpetrators. The case, with 878 indictments, is still in the court system.

The Ten Most Common Types of Insurance Fraud

In case you think that fraud is limited to automobiles and healthcare, consider all of the types of insurance that are available – and know that all of them are susceptible to fraud. In fact, investigators from Business Insurance have provided a list titled “10 Most Common Types of Insurance Fraud.” These cases even include staged home fires and faked deaths: 

  1. Stolen car
  2. Car accident
  3. Car damage
  4. Health insurance billing fraud
  5. Unnecessary medical procedures
  6. Staged home fires
  7. Storm fraud
  8. Abandoned house fire
  9. Faked death
  10. Renter’s insurance

Investigating Insurance Fraudulent Claims are Best Left to the Experts

With the enormous liability presented by insurance fraud, every organisation should address the risk in their due diligence and fraud prevention programs. The best way to do that is to bring in the experts at CRI Group to help implement this as part of a risk management plan.

When fraud is detected, CRI Group’s investigations cover the full range of fraudulent claim cases, from health care fraud to disability and even fake death claims. CRI Group’s thoroughly trained experts are trained, for example, to look for the tell-tale signs of fraud carefully reviewing claims, medical and hospital records, conducting interviews, examining statements and documents and performing on-site inspections.

In Part Two, we will examine some of the tell-tale signs and red flags of fraudulent claims, and how insurance fraud investigation companies can have a better chance of detecting it before it causes irreparable damage. Like many criminal schemes, this type of cases are often well-hidden – the key is knowing what to look for.

Do you want to read the next series now? Not a problem, this three-part series of articles is part of our “The Unseen Enemy: Insurance Fraud” ebook with actionable advise on how to protect your business and much more. Download the FREE ebook here!

 

 

 

 

 

 

Who Is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301:2021 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

 

 

FTC guide for small business to avoid Scams

Federal Trade Commission (FTC) has released a guide for small business.
Scams & Your Small Business guide is part of FTC’s efforts to help small business owners to avoid scams.

If you are a small business owner or are part of a non-profit organisation, you spend a time and energy on making sure your organisation works well. But when scammers go after your business, it can hurt your reputation and your bottom line. The guide explains common scams that target small businesses, describes scammers’ tactics, and provides steps that you can take to protect your business from scams. Tell your employees and colleagues what to look for so they can avoid scams.

Scams & Your Small Business guide can be your best protection against scammers. Check out the guide here!

 

Speak up against scams

Report any illegal, unethical, or improper behaviour. Our Ethics and Compliance Hotline is an anonymous reporting mechanism that facilitates reporting of possible illegal, unethical, or improper conduct when the normal channels of communication have proven ineffective, or are impractical under the circumstances.

At CRI Group, we are committed to having an open dialogue on ethical dilemmas regardless. This hotline is available to all employees, as well as clients, contractors, vendors and others in a business relationship with CRI Group and ABAC Group.

Compliance Hotline is accessible by both phone and online. If you make a report directly by telephone, you will speak with the Compliance Department directly. If you submit a report online, the system will guide you through the reporting process, and a PIN number will be generated automatically once you complete the report.

 

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

7 Traits of a Resilient Leader

Every successful leader has encountered a challenging scenario at some point in their career. The unprecedented COVID-19 pandemic, however, has forced leaders to face unforeseen new challenges. With the pandemic’s colossal impact on operations, workforces, profits and supply chains across the globe, all eyes are on leadership to guide their businesses through this crisis. Resilient Leader

Resilient leaders are generally seen as more effective, making them an asset to any business; but what is resilience and how can it be applied to your management skills?

What is Resilience?

Resilience is the capacity to recover quickly from difficulties; it is a further evolution of stress management. This makes it a “no brainer” as to why resilience is such a popular concept in today’s business environment. Many businesses are pushing the concept of resilience as a way of helping workers better cope with the stresses and strains of the modern-day office and unlock their performance potential.

In this article, we look at seven essential qualities that characterise resilient leaders, and how to increase your resilience. In general, resilient leaders:

  1. Show empathy
  2. Are adaptable and able to improvise
  3. Are self-aware and open to feedback
  4. Take calculated risks
  5. Keep a positive attitude
  6. Develop others
  7. Communicate effectively

1. Resilient Leaders Show Empathy

COVID-19 has generated one of the greatest challenges and, simultaneously, one of the greatest opportunities for resilient leaders – at all levels. According to a Gallup U.S poll, six in 10 people are “very” or “somewhat worried” that they or a family member will be exposed to COVID-19 (Gallup, 2020). During this crisis, emotional management is even more crucial than ever. According to studies carried out by Development Dimensions International (DDI), empathy is the most critical leadership skill. Leaders who display compassion, authenticity and vulnerability – and are capable of apologising when they’re wrong and handle criticism without blame – create strong emotional bonds with their teams (DDI, 2020).

The most resilient (and effective) leaders can demonstrate empathy and a high level of emotional intelligence. When your team feels understood, they feel more motivated and more confident to contribute cultivating stronger conversations, ideas and debate. As Mark Cuban shared in a recent interview: “How you treat your employees today will have more impact on your brand in future years than any amount of advertising, any amount of anything you literally could do” (Just Capital, 2020).

2. Resilient Leaders Are Adaptable

With COVID-19 infecting approximately 311,641 people in the UK alone, health officials suggested using hand sanitiser as the easiest way to prevent the spread of the disease. Consequently, these announcements led to panic buying (Euronews, 2020). In this type of situation, a resilient leader should be able to visualise this action as an opportunity – for example, dozens of spirit manufacturers across the UK started to produce hand sanitisers (i.e. BrewDog and Leith Gin). This is a classic example of an instant attitude adjustment – looking at what they can do as opposed to what they can’t (Telegraph, 2020).

When faced with change, resilient leaders can focus on the things within their business that they can still control. Whether impacted by new technologies, environmental challenges or even ethical dilemmas, the modern business landscape is always changing. A resilient leader needs to be flexible and adaptable to succeed. Is flexibility part of your leadership style?

3. Resilient Leaders Are Self-Aware and Coachable

According to Health Care Business Today, self-awareness and coachability are “The Two Most Important Leadership Traits” (Health Care Business Today, 2019). We think so, too. Resilient leaders are self-aware, confident, and most of all, able to recognise their strengths and overcome their weaknesses. Resilient leaders are open to feedback, ask for feedback and are always demonstrating a real effort to improve.

4. Resilient Leaders Take Calculated Risks

Successful leaders earned their success through taking calculated risks. When Amazon CEO Jeff Bezos launched AmazonFresh, he was scrutinised by others because he didn’t choose a successful delivery or supermarket executive to run the venture. Instead, Bezos selected a team that had previously run a web-based food delivery service in the ‘90s (which collapsed after two years in business). Why? Bezos knew that the team had learned from their failure, which made them the perfect choice to succeed with a new project.

Resilient leaders like Bezos take calculated risks while accepting that failure is a by-product of innovation and success. They learn to become comfortable with being uncomfortable, and flourish as the world changes around them.

5. Resilient Leaders Can Keep a Positive Mindset

The impact of COVID-19 is tough to manage. It is vital to have a positive mindset that can influence fellow professionals and raise team morale while maintaining business momentum.

Under the challenging circumstances posed by the COVID-19 crisis, a resilient leader needs to be enthusiastic, offer praise for success, and give credit when it’s due. American psychologist Carol Dweck has stated in her book “Mindset: The New Psychology of Success” that “a change of mindset must happen before other positive transformation can occur.”

Resiliency is needed when we encounter failure. As a resilient leader, you shouldn’t view failure as final, but as a necessary step to move further along your journey.

6. Resilient Leaders Develop Others

The most resilient leaders are concerned about the development of their teams. Developing others helps everyone to learn from their mistakes. We continue to find that leaders who want and accept honest feedback for themselves are more likely to give productive feedback and coaching to others.

7. Resilient Leaders Communicate Effectively

Effective communication helps teams understand changes, expectations and new directions. This understanding is the key to the success of any team. The most resilient and best leaders always communicate their intentions effectively to others and are willing to help their teams understand a new strategy or direction.

The COVID-19 pandemic is proving to be the ultimate test for business leadership. In times of crisis, only certain individuals can adapt and stand tall amongst the crowd. When it comes to leaders, being able to implement resilience tools and strategies will not only make you a better leader but help the company overall.

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301:2021 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Ethical code of conduct: What should be covered?

Business leaders are usually quick to communicate their expectations to employees, especially when it comes to financial goals or tasks that they want accomplished. However, what is often lacking is a clear, concise explanation of what the organisation expects in terms of ethical behaviour. The recent article “Puffery or Not? Courts Examine Corporate Codes of Conduct” explains that although a number of federal courts have found code of conduct statements to be non-actionable puffery, given the uncertainty in the face of the novel CODIV19 pandemic, public companies are ought to review their codes of conduct and revise them if necessary to mitigate litigation risk. Ethical code of conduct:

Does your organisation have an ethical code of conduct? If not, you might be making assumptions that your employees know to conduct themselves in an ethical manner, when, in fact, this expectation only exists in a grey area in their minds – if at all. In fact, some employees who have engaged in fraud, corruption or other unethical situations have claimed that while they knew their behaviour was wrong, they thought it was implicitly accepted by their bosses and, in some cases, their company on the whole.

Rather than assume that ethical rules “go without saying,” every organisation should spell out what they expect of their employees when it comes to ethical behaviour. At CRI Group, we counsel business leaders on the principal that every organisation should have a written, carefully considered ethical code of conduct as part of their fraud prevention strategy. CRI’s Certification program through the ABAC Center of Excellence includes developing an ethical code of conduct as part of the training and development phase for clients.

What should be covered?

An ethical code of conduct should be tailored to your company and your organisation – no two will be exactly the same. What are the risks inherent in your organisation? What about in your industry? A pharmaceutical company will have some different risk areas than a retail store, for example. A nonprofit organisation might have concerns that relate to fundraising, a government agency might be focused on preventing bribery or collusion.

The goal of an ethical code of conduct is to help all employees understand the expectation that they behave in a legal and ethical manner at all times, and that the organisation has zero tolerance for unethical behaviour. It should include the following focal points:

1. Business values

This can include your organisation’s mission and vision, and should help set the tone for how the organisation relates to its clients, partners, its own employees and the public at large.

2. Guiding principles

The principles that guide your company likely include customer satisfaction, financial success and profitability, improvement and growth. Your company might also follow policies of corporate responsibility, such as respect for social and environmental issues, and support of the community and/or nonprofit efforts.

3. Role of leadership

This section of the code of conduct should state that management has clearly endorsed the code, and that employees can approach any manager or executive with ethical concerns or complaints.

4.Regulatory and compliance

This section should communicate the organisation’s commitment to meeting all compliance requirements, from OSHA and EPA to Sarbanes-Oxley and Dodd-Frank. This reinforces leadership’s expectation that employees must act diligently and ethically to uphold those standards, as well.

5. Employee responsibility

Every employee, from top to bottom, shares the responsibility toward upholding the ethical standard defined in the code. Contractors and volunteers are also expected to follow the standard of behaviour.  Furthermore, the code should make clear that if unethical behaviour is detected, turning a blind eye or deciding “it’s not my problem” is unacceptable. That, in itself, is a breach of the ethical code.

CRI Group can help your organisation with the finer points of drafting and implementing an ethical code of conduct. ABAC Center of Excellence includes this critical piece as a part of any robust fraud, bribery and corruption prevention program.

After the ethical code of conduct is approved by company leadership, it should be read and signed by all employees (with the signed copies kept on file by the organisation). And it should be displayed prominently in the office. Unethical behaviour, including fraud and other corruption, is everyone’s problem, and it must be prevented, detected and reduced. Staying one step ahead of any critical risk to your organisation is part of being an effective business leader.

ISO 37001:2016 Anti-Bribery Management System certification is offered under CRI Group’s ABAC® Centre of Excellence, an independent certification body established for Anti-Bribery Management System training and certification, Compliance Management System and Risk Management System certification. The program will be tailored to your organisation’s needs and requirements. For assistance in developing and implementing a fraud prevention strategy, contact ABAC today or get a FREE QUOTE now!

1 in 3 Furloughed UK Employees Pressured to Work

The COVID-19 pandemic has been a major crisis for businesses and employees around the world. To make matters worse, some unscrupulous employers in the UK have abused the Coronavirus Job Retention Scheme by engaging in furlough fraud. They do this by accepting taxpayer money designed to help them pay salaries for furloughed workers, who are essentially “deactivated” to due to loss of business and quarantine – yet they pressure them to work (or they accept furlough benefits without the employees’ knowledge).

The system is designed to keep companies from laying off employees during such a time of crisis. Unfortunately, a crisis can also present the opportunity to commit fraud. In this case, pressuring employees to work despite being furloughed is an abuse of the system and a violation of the law. Employers who do this are gaming the system and taking advantage of employee labour, with taxpayers footing up to 80 percent of the bill (their salary).

How big is the problem? According to a recent study, more than one in three employees on furlough in the UK are currently under pressure to continue working while on furlough (Express UK, 2020). This shocking statistic has demonstrated that the issue of abuse in the furlough system is not an isolated affair, but appears to be widespread. So much so that HM Revenues and Customs is actually offering a 30-day amnesty period for employers to “admit to deliberate non-compliance of furloughing rules” (Yahoo UK, 2020). More than 1,900 calls have been logged to the furlough fraud hotline, and companies face penalties with new legislation on the way to punish violations.

What does furlough fraud look like? Here are some of the ways that employers are abusing the system.

1. Furloughed employees are pressured to work

A survey showed that 27 percent of furloughed employees were asked to send and respond to emails, and 17 percent were asked to make phone calls. Furlough workers by law are not expected to be actively engaging in any work for the employer while furloughed.

2. They are asked to come to the workplace

Rather than being asked to work from home (which is still against the rules), 12 percent of furloughed employees report being pressured to physically attend their workplace.

3. Employees are encouraged to “volunteer”

A reported 11 percent of furloughed employees are being pressured to continuing working for their employer as a “volunteer,” which is against the law.

4. Some employee don’t even know they are furloughed

In certain cases, employers have claimed furlough on their employees’ behalf, without their knowledge, while they continue working.

In their efforts to eradicate corruption, Parliament is pushing through new draft legislation that is expected to become law in July as part of the Finance Bill 2020. Dawn Register, partner in tax dispute resolution at BDO, told Personnel Today: “It is clear that HMRC is now gearing up to tackle incorrect and fraudulent claims for Covid-19 support payments. Latest government statistics show the eye-watering numbers paid out and why HMRC resources will focus on this potential new area of fraud” (Personnel Today, 2020).

The problem of furlough fraud illustrates the danger at companies that don’t adhere to a strict ethical code of conduct. By contrast, a proper tone at the top that helps discourage fraud and corruption would make it just as difficult and unacceptable to flout furlough laws as it would be to, say, engage in bribery, or cook its books. Unfortunately, many entities in the UK will likely learn the hard way when investigations and penalties bring them into compliance at a high cost. Legislators have signalled that both criminal and civil penalties will be on the table for those companies found to be abusing the system.

At CRI Group, our experts are focused on anti-corruption methods and help implement proper anti-fraud processes that prevent problems like furlough fraud. Our due diligence processes can also detect when such fraudulent acts are being undertaken without the knowledge of ownership or directors. Let us show you ways to detect and prevent fraud at every level, and build a corporate culture that’s based on compliance and ethics.

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

6 challenges for compliance officers in 2020

The job of a compliance officer can be a difficult one. Organisations from large corporations down to small government agencies rely on their compliance officers to keep them within ethical and legal boundaries. They also rely on them to maintain monitoring and reporting requirements, and stay abreast of any changes in the compliance landscape. For professionals in this field, the bad news is that challenges will continue to increase in the near future (as we’ll explain in this article). The good news is that there are trained experts available to work hand-in-hand with organisations’ compliance officers to minimise risk and help them remain in compliance.

The stakes are high, as organisations in both the public and private sectors face new laws and regulations in jurisdictions around the world, along with increasingly strict enforcement and punishments. Investigations of violations can, and often do, lead to heavy fines. In some cases, criminal charges may result – and these can be levied against the organisation, or individuals, or both. Here are some of the biggest challenges facing compliance officers today:

 1. Anti-money laundering (AML) regulations

The Panama Papers and other major scandals, including the illicit funding of certain terrorist actions, brought money laundering issues firmly into the spotlight. Many governments have been stirred to action to create stronger measures meant to prevent the illegal funding of criminal or terrorist enterprises. In the European Union, this resulted in the 5th Money Laundering Directive (5MLD), which takes effect in January 2020. 5MLD impacts organisations most directly in how they handle their know-your-customer (KYC) processes.

In the run-up to the 5MLD, there was increased attention on high-risk countries. Clients or transactions engaged in high-risk countries are now subject to enhanced due diligence when performing onboarding checks. Compliance teams need to ensure KYC is not a simple “tick box” exercise during the onboarding phase, and ongoing monitoring processes need to be implemented to manage changes throughout the customer lifecycle.

5MLD requires enhanced due diligence when dealing with high-risk countries. In addition to obtaining evidence of the source of funds and source of wealth, information on beneficial ownership and background to the intended transaction must also be recorded. The EU may also designate a ‘blacklist’ of high-risk countries for money laundering.

2. Conflicts of interest

Risks related to conflicts of interest are significant at every level of the company. Starting with the board of directors, an effective board must be transparent about potential conflict issues and address them on an ongoing basis. Board decisions that either suffer from actual conflicts can risk the board’s adherence to its duties and create real legal risks. Even the appearance of a conflict can raise real issues and transparency becomes even more important in these contexts.

This same level of risk can undermine the integrity of senior management. When senior executives fail to address real and significant conflicts, the integrity and overall leadership trust factor can deteriorate. A compliance executive must be willing to take on these issues, even when it is difficult to confront senior executives.

Within the private equity (PE) industry, conflicts and their adequate disclosure remain problematic. In recent years regulators have made examinations of PE firms and their complex structures top priorities. Most major organisations – and their compliance officers – see outside business activities as a risk.

3. Innovation driving new demands

New innovations are providing increased efficiency in compliance processes, which is a major plus for organisations. Always a double-edged sword, however, technology also creates more issues in data security, not to mention the training and expertise required to master it.

For many ‘non-tech’ professionals such as compliance officers, rapidly changing technology can be a concern, as the importance and integration of technology into the compliance suite continue to evolve. Compliance officers may not need to become technology experts, but they do need to ensure that tech-related risks are addressed within their firm’s framework. Compliance must be aware of rules and regulations from every jurisdiction with authority over the firm’s activities. This is another area where partnering with an outside firm that provides training and technology resources can be a major advantage.

4. Regulatory and political change

Recent years have seen a flurry of new regulations from various governmental bodies and jurisdictions, from the General Data Protection Regulation (GDPR) act to 5MLD. The GDPR, for example, has extraterritorial reach. It also serves as a model for future possible regulations in the critical area of data privacy and cybersecurity.

In Europe, Brexit creates real uncertainty for the UK’s regulators, and the industries that they regulate. But Brexit also impacts EU member states and any organisations doing business within or through the UK. The impact is far-reaching, and regulators face major challenges in responding to profound changes in policy, the legislative framework and the wider economic context.

Politics in the United States and other nations have also seen similar dramatic shifts in governmental control and resultant effects in policy, which can impact regulatory laws and how they are implemented and enforced worldwide. One thing is certain – investigations and legal actions based on violations of the Foreign Corrupt Practices Act (FCPA) continue to increase, and organisations must remain diligent in conducting risk assessments and implementing control measures to remain in compliance.

5. Personal liability

One area of concern sure to grab the attention of any compliance officer is the issue of personal liability. Recent news stories have reported criminal convictions, some leading to prison sentences, of executives, “middle men” and other individuals involved in various scandals. Compliance officers should take heed, as their responsibilities to their company can also extend to their own professional conduct being placed under a microscope. Many compliance professionals are aware of this, as a recent Thomson-Reuters survey found that 60% of them expect personal liability to increase.

New initiatives underline this reality, such as the Senior Managers and Certification Regime (SCMR) in Europe. It places a focus on firms’ senior managers and individual responsibility, and extends to all Financial Conduct Authority (FCA) solo-regulated financial services firms. The FCA itself has been increasing enforcement notices against individuals. We can expect an increase in these types of measures and they will apply to industries beyond those in the financial sector.

6. Ethics and integrity

Today’s business landscape brings an increased emphasis on the culture of an organisation, with an eye toward ethical practices and principles. With growing scrutiny from both regulators and stakeholders, the pressure is on for compliance professionals and their superiors to take broader responsibility for policies, procedures and controls to create a truly ethical business.

The Cambridge Analytica scandal is a notable example of how data misuse has serious brand and societal implications, on top of legal and compliance penalties. The public outrage was so intense that governments were forced to act, calling on Facebook and other involved parties to testify and explain themselves. The market’s reaction was also punishing, with more than $100 billion knocked off Facebook’s share price in days, while Cambridge Analytica went out of business.

In conclusion, AML regulations, conflicts of interest, innovation driving new demands, regulatory and political change, personal liability, and ethics and integrity issues are among the biggest challenges facing today’s compliance professional. This is the time to address solutions. There is expert help and a wealth of resources available, with no better time to leverage them than the present.

Let us know if you would like to learn more! Contact us today and get your FREE QUOTE now!

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.