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Dishonest staff still pose threat to business

Wednesday 3rd August 2011
Analysis of staff frauds recorded by Members of CIFAS - the UK's Fraud Prevention Service - during the first six months of 2011, reveals the continued seriousness of the problem posed by dishonest, fraudulent staff operating within organisations.

Key findings include:

* Dishonest actions by staff to obtain benefits by fraud or deception account for over 50% of all confirmed staff frauds committed in the first half of 2011, rising by nearly a quarter in the first half of 2011 compared with the last half of 2010;
* Additionally, fraudulent withdrawals from a customer's account remain one of the most frequently used fraudster techniques - demonstrating that old favourites are never entirely discarded in favour of new, emerging, threats;
* Theft of customer data by staff remains an ever-present threat, with 65% of such cases involving this data being given to third parties (proving that the tentacles of organised crime continue to plant or coerce staff into aiding their criminal endeavours).

During the first six months of 2011 there has been a noticeable surge in the number of staff fraudsters committing dishonest actions to obtain benefits through the manipulation of a third party account: e.g. making changes on an account in order to appear to have met targets, facilitate fraudulent withdrawals or benefit third parties.

CIFAS Staff Fraud Adviser Arjun Medhi said: "In a challenging work-environment, the motivation to commit frauds of this kind is perhaps unsurprising, but with frauds of this kind frequently linked to third parties, the spectre of organised criminal networks targeting staff inside an organisation is one that cannot be overlooked. Organisations must always remember that threats come from both inside and outside, and in these cases the two are often working together."

Another ever-present danger, of course, remains the old threat of the "hand in the till" - and, in spite of the vulnerability to data-theft (highlighted by CIFAS' Staff Fraudscape report - May 2011), the first six months of 2011 prove that the old threats never completely disappear.

Medhi said: "The first half of 2011 saw a 17% increase in the levels of unauthorised activity on a customer's account, with nearly a half of all of such cases (43%) involving the fraudulent withdrawal of funds from a customer's account. We frequently hear of the value of data, intellectual property, and changing forms of payment - but it is important to remember that however these frauds are facilitated they are done for money. Cash is still king for the fraudster and these frauds are theft: plain and simple. As with recent increases in the number of cheque frauds (as revealed in Fraudscape Bulletin), in the world of the staff fraudster it truly seems that the old favourites never go out of fashion."

He added: "There are numerous well-known motivations for fraud; from financial hardship through to dissatisfaction or feeling under undue pressure. Many of these were picked up by the Chartered Institute for Personnel and Development's recent Spring survey to assess the attitudes and opinions among UK employees.

"What this means, therefore, is that an organisation's anti-fraud processes are essential and must never be sacrificed, but the most important aspect for any organisation is its staff. While most are trustworthy, hard-working and honest - an organisation's staff are the first barrier to any bad apples lying inside the workforce, and that an unengaged workforce will provide no barrier to the any criminality that might take place."

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Mike Jones

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