Adjusting to new compliance and fraud risks in disruptive times
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Adjusting to new compliance and fraud risks in disruptive times

When it comes to disruption, we tend to think of new technologies or new models that shake up traditional players across a range of sectors, but not of a pandemic like COVID-19. Since the corona crisis hit us full strength, we have been in the middle of one of the most disruptive periods ever witnessed. This has created new possibilities for companies, but at the same time has caused new risks to surface. It is clearly time to adjust, time to make sure fraudsters and money launderers do not stand a chance!

Now that businesses which came to a sudden halt because of COVID-19 are preparing for a restart sometime soon, it is extremely important for them to be aware of the new risks they are facing, of the challenges arising from both compliance and fraud detection. Times have changed and ‘getting back to normal’ will not happen any time soon, if ever. So, adjusting to the new reality is not just good for the short term, it is necessary for the longer term as well. Recent events have shown that businesses should not procrastinate. Fraudsters and money launderers are looking for opportunities and they will grab them if companies fail to adapt.

Red flags

The current crisis is strongly related to a health emergency, which money launderers and fraudsters are trying to turn to their advantage. Certain health products, like face masks and corona tests, are in short supply as most of them were fabricated in China. That country went into lockdown after being the first to be affected by the virus outbreak. Companies are actively looking for subsidies to make sure they will get through this extremely difficult period. And some businesses have come to a full stop, like hairdressers, night clubs, pubs, and restaurants. These also happen to be the kind of enterprises that often spring to mind when we are talking about money laundering vehicles.  

Money launderers and fraudsters are trying to profit from such developments and are inspecting new areas of interest. One example is the illegitimate provision of scarce or fake health products, a practice the British Local Government Association has already warned against. Or there might be claims for wage compensation even though there are no employees at the ‘company’ in question. Shifting to new types of businesses as vehicles for money laundering is another recent trend. The Dutch Financial and Intelligence Unit has warned private individuals and the financial sector to be on the alert and has shared some of the red flags that could indicate that fraudsters and money launderers are up to something, in both the private and business spheres.   

Compliance and detection

COVID-19 offers new avenues of crime. That is why not only financial institutions but also non-financial organisations and small and medium-sized enterprises (SMEs)[A1]  should work on their compliance and fraud detection processes. They need to make sure they will not fall into the traps set by crooks. Businesses that are caught out might well suffer major financial loss and irrevocable damages to their reputation, but they will also show the world they are failing to justify their licence to operate. These are outcomes many organisations cannot afford, especially in this day and age. We have seen the financial reserves of healthy companies evaporate because of the crisis. Losing a licence to operate, getting fined by the authorities, and even harming the corporate image can be fatal nowadays. Just to be clear: it is not about damage control; it is about avoiding these kinds of situations in the first place.

We can imagine that you do not want to hire additional people, but you do want to remain compliant and able to detect and identify criminals before you do business with them ‒ not via a screening process that is manual and driven, most of the time, by gut feeling, but one that is automated and data driven, one that targets not just your first-degree relations, but also the network behind them.

We know compliance and fraud detection are complex: that is why we are bringing you our Graydon Network incl. XSeptions. With this solution, you can automatically check your customers, suppliers and prospects, as well as your second-degree relations. In one click! We also have red flags to warn you when we think something is not right, and you can choose which ones are the most important ones to you and your company. In the meantime, you can focus fully on your business.

Want to know more about our risk solutions and stay clear of corporate fraud? Then register your interest here.


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