How can we prevent internal fraud?

The biggest asset of a company and institution is its employees, because it is possible to grow by drawing strength from the values that employees bring and create. Nowadays, with the increasing workforce and the impact of digitalization, companies have started to operate in more complex structures. Therefore, it is very important to select and position existing and new employees correctly within the company.

According to the estimation of the Association of Certified Fraud Examiners (ACFE), the typical revenue loss of a company (big or small) due to internal fraud cases is 5% of its income. In a report published by ACFE in 2020, more than 2,500 internal fraud cases involving employees were examined from 125 countries and the total damage caused by internal fraud was determined to be 3.6 billion dollars.
According to the research, the most common types of internal fraud are corruption, invoice fraud, expense fraud, payroll fraud, and cash theft. Generally, as the malicious person's position within the company increases, the loss and damage caused to the company also increase.

The majority of internal fraud cases are discovered by chance, according to the ACFE report.

This is either due to someone outside the company or one of the company's own employees reporting the incident. Companies with practices such as ethical hotlines have more incidents reported by employees. Another way to detect internal fraud is through periodic internal and external audits. Employee-related fraud and corruption are usually discovered by chance.

Unfortunately, statistics show that companies can only recover a small portion of the losses caused by occupational fraud cases. Additionally, once a fraud incident is detected, it is already too late, and a loss has occurred.

Prevention is more important than detection

Therefore, the cheapest and most effective way to prevent internal fraud losses is to ensure that the people working within the company are the right and safe individuals. This minimizes employee-related risks. By conducting necessary checks, verifications, and investigations on individuals employed in the company, these risks can mostly be prevented and managed.

Selecting the right candidates to work within the company is critical

One of the cheapest and fastest ways to prevent potential employee-related risks is to screen them correctly before hiring. It is necessary to verify whether the candidate is who they claim to be before adding them to the company. Currently, most companies verify the documents and information of their prospective employees using traditional methods. However, with the rapid increase of digitization, the fraudulent techniques used by malicious individuals are surpassing these traditional structures.

Resume Verification and Background Check Procedures must keep up with the digital age

Nowadays, it is quite easy to produce fake identity, diploma, criminal record, professional certification, and driver's license documents, or manipulate existing ones. Unfortunately, just scanning barcodes is not enough to detect fake documents and information. These false documents can contain details that are not visible to the human eye. Therefore, it is important for companies and institutions to conduct detailed examinations by their HR and Corporate Security Departments.

In addition, additional investigations may be necessary for individuals who will work in sensitive positions. For example, if a candidate for employment will be given signature authority, it is necessary to examine whether the person has any commercial situations such as company partnerships in other companies and/or countries to comply with the necessary regulations and compliance rules. It is very important to determine whether these individuals are listed on international AML (Anti-Money Laundering) blacklists and sanction lists.

Similarly, investigating whether employment candidates have any situations that could damage the company's reputation in open-source web searches can prevent future risks.

Selecting the right job candidate can minimize the risk of internal abuse. However, conducting the above-mentioned review and investigation processes effectively, quickly, and reliably can be a challenging process for companies.

Manage your employee-related risks accurately with FinalCheck!

The documents submitted by the candidates can be digitally and automatically verified in seconds on a single screen with FinalCheck.

Thus, document fraud that is difficult to detect by the human eye can be prevented. Employers can also request special investigations for the candidate based on position requirements through FinalCheck. FinalCheck analysts, who are experts in their field, conduct the necessary research on job applicants and report back to the employer.

By digitizing the final step of the hiring process, this system makes it much more secure, allowing companies to easily manage their employee-related risks. It offers the right assistance to companies to prevent internal and occupational abuse cases.

Now, with FinalCheck, companies can easily protect both their employees and customers.

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