Could you be employing a fraudster?

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Written by Arjun Medhi, Operations Manager – Staff Fraud, CIFAS – The UK’s Fraud Prevention Service

It is interesting, as well as alarming, to note that Members of CIFAS – The UK’s Fraud Prevention Service, reported more staff fraud between June and December 2012 than in the whole of 2011.  The majority of the cases of confirmed staff frauds reported to CIFAS are from the financial services sector.  Although there was an increase in CIFAS membership, most cases of staff fraud were reported by Members who joined prior to 2011. 


A significant reason for the increase was employment application fraud.   An employment application fraud is where a job applicant has knowingly provided false information, documents and/or has concealed information that was legally required for the job application.  Employment application frauds constituted 35% of those reported during the six month period.  In addition, 48% of staff frauds reported in this time period were ‘Dishonest actions to obtain a benefit by theft or deception’.  This type of staff fraud has consistently been the most frequently reported by CIFAS Members over the last 4 years.  These are acts of physical theft (such as stealing IT equipment) and deception (such as falsifying expenses).   

 

If we examine the employment application fraud problem further, the most common reason to file this type of fraud was concealing adverse credit history.  This is where the applicant conceals their credit history in such a way that by doing so it would affect any decision to offer a post to the applicant.  This is unsurprising considering that, every 4 minutes and 42 seconds, one person is declared bankrupt or insolvent and 1,556 County CourtJudgments (CCJs) are issued every day.[1]  However, people will still try to secure a job declaring that they have had no CCJs registered against them or have never been declared bankrupt – even though they knew they were.  
Concealing employment record/history is also a common feature in employment application frauds.  For example, there are individuals who have stated that they previously worked for a bank but, after vetting, it was identified that they had never done so.  There are also job applicants who have stated that they were made redundant but, in truth, were dismissed for fraud.  We are starting to see prolific fraudsters who are attempting to get jobs back in the banking sector with the intention possibly to perpetrate further frauds.  These individuals are trying to evade stringent vetting by changing some of their personal and previous employment details.  This includes slightly changing their names (such as swapping their first and surnames); changing their date of birth, changing a letter in their National Insurance Number.  However, many of these cases have been prevented through the Staff Fraud Database.  What Members have identified is that the fraudster has changed much of their personal details except, for example, one particular detail such as their mobile number. Therefore, applicants’ details are matched against various data fields in previous fraud cases on the Staff Fraud Database  including the mobile phone number.  It is then subsequently verified and confirmed through further investigation that the applicant is a fraudster.

 

Other areas of concern around employment application frauds are job applicants concealing their previous criminal convictions and providing false documents.  However, CIFAS has seen very little activity of employment application frauds involving false identities and, more surprisingly, false qualifications.  Not only is it easy to fake a degree certificate, you can buy one on the internet.  In the UK, there are more than twice as many bogus universities as genuine ones.  In 2011, it was reported that there were 339 bogus academic institutions in the UK, the highest reported in Europe and the second highest reported in the world.[2]  So this raises the question as to whether UK employers are doing enough to ensure they are hiring the right candidate with the correct academic credentials. 


Last year CIFAS reported that 1 in every 10 individuals reported to the Staff Fraud Database was linked to organised crime.  This is an astonishing statistic and should alert employers that organised criminals continue to infiltrate organisations in order to commit systematic insider fraud.  Organised criminals are known to infiltrate by exploiting the organisation’s weak vetting controls.


Although greed is the one of the main motivations to commit staff fraud, rising personal debt, as demonstrated above, is also a factor.  Moreover, in the last 5 years, some CIFAS Members have also noticed that their employees who commit fraud do so in order to pay off their gambling debts. 


Other staff fraud cases that are commonly reported to the Staff Fraud Database include:

  • Stealing cash from elderly customers in a branch office
  • Manipulating internal accounting or IT systems with the intent to defraud by removing or reducing the charges applied to personal and third party accounts
  • Fraudulently withdraw cash from a customer account without the customer’s authority
  • Disclosing customer data to organised criminals
  • Knowingly accepting false ID documents to support a fraudulent transaction and the facilitation of the processing of transactions on stolen cards.


All of these cases are confirmed and proven.  However, as with most fraud, these cases are not reported to the police and received no court action.  Therefore, these people are out there attempting to find jobs in the financial services and across different business sectors – and possibly with your organisation.  And if vetting processes are not stringent, they may be successful.  Quite clearly, by showing that you have a comprehensive vetting strategy at an early stage, you can prevent and also deter those individuals from trying to enter your organisation. 

 

 About the CIFAS Staff Fraud Database

CIFAS is theUK’s Fraud Prevention Service.   The CIFAS Staff Fraud Database is a data sharing scheme where CIFAS Members upload and share information about their cases of confirmed staff fraud.  The database is recommended by the Financial Services Authority and the National Fraud Authority and used by nearly 100 Member organisations.  Some of these Members are well known financial services firms including major retail banks.


The HireRight Blog is provided for informational purposes only and should not be construed as legal advice. Any statutes or laws cited in this article should be read in their entirety. If you or your customers have questions concerning compliance and obligations under United States or International laws or regulations, we suggest that you address these directly with your legal department or outside counsel.

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