Huge fines levied, executives indicted, but business fraud is 'booming'

Billions of dollars in penalties have been levied and executives convicted by the dozen in a supercharged enforcement environment, however the number of firms with anti-bribery/anti-corruption (ABAC) policies rose by just one per cent in the last two year

LONDON - July 24, 2014.

One in five businesses did not to have an ABAC policy, half of respondents had not attended ABAC training, and there has been a sharp drop in the level of compliance reporting issues to boards, new findings show.

Furthermore, a persistent minority of businesses 'continues to neglect to implement even basic steps toward an effective compliance program'.

EY's 13th Global Fraud Survey of more than 2,700 executives across 59 countries shows regulators aggressively pursuing financial fraud and bribery cases, while instances of fraud and reported levels of corruption are shown to be rising.

They found 'a surprisingly big minority of respondents would pay bribes or make questionable payments' - and advised companies should have tailored anti-corruption training programs.

The US continues to lead the fight against fraud, with the Securities and Exchange Commission (SEC) and the Department of Justice (DoJ) clamping down on a wide range of offences such as financial statement fraud and bribery, at home and internationally.

One division of the SEC has started to use forensic data analytics tools to mine corporate big data for fraud, driving compliance technology forward. And whistle-blowers are increasingly being engaged by official departments to uncover financial reporting and disclosure issues.

The DoJ for its part is starting a new wave of insider-trading cases, using techniques more commonly deployed against organised crime, such as wire taps.

Meanwhile, the US Department of Treasury’s Office of Foreign Assets Control has been charging major financial institutions with money-laundering and sanctions violations.

Agencies are also working more closely together to prosecute individuals and companies for Foreign Corrupt Practices Act (FCPA) offences. One recent example of this is the $384m resolution by Alcoa with the DOJ and SEC.

Of all the global anti-fraud legislation that has come out in recent years, the FCPA remains the most robustly enforced...

The first FCPA fine of 2014 for one US company was over $200m, with other countries following their lead. Both Germany and Italy have brought high‑profile cases in the past year, and the UK is tipped to bring a prosecution under its Bribery Act later this year.

Regulators in Germany, Italy, the UK and France have been involved in major enforcement actions including financial services mis-selling, reference rate manipulation and bribery.

Cross-border cooperation among prosecutors is on the rise, with recent cases involving inter-European Commission investigations and a joint offensive against cartels by Japan and the US.

Other nations were noted in the report as continuing to strengthen their anti-fraud legislation, including India, Brazil and China.

In December, a new framework from the Committee of Sponsoring Organizations of the Treadway Commission (COSO) will provide detailed steps on anti-fraud controls, and in doing so, increase pressure once more on global, domestic and cross-border business to meet even tighter compliance regulations.

Presswire

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