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Fraud Awareness Week – What it is and Why is it Important?

15 November, 2023

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Fraud is one of the major threats to business globally. It has always been a hot topic of discussion among top officials in various sectors. With the advent of technology, society started to value transparency and fairness using digital applications. Fraud is a direct threat to businesses and individuals alike which opposes the demand for transparency. 

But just like every coin has two sides, technology also comes with a risk of fraud. In 2023, over $48 billion has been lost so far to online payments worldwide. To counter fraud, businesses all across the world spread information in their communities and workplaces, especially during the Fraud Awareness Week in November. 

This blog will discuss the importance of Fraud Awareness Week and explain how it plays a crucial role in fraud detection and prevention. 

What is Fraud Awareness Week?

The Association of Certified Fraud Examiners (ACFE) took the initiative in 2000 to counter fraud. International Fraud Awareness Week is a response to rising fraud rates and thousands of organizations come together worldwide to raise digital fraud awareness. ACFE provides access to large-scale content for businesses to take part in this initiative and spread awareness among their audience without any hurdle. 

Fraud Week is held from November 12th to 18th globally to make people aware of prevailing fraud types, the way cybercriminals execute them, and how to prevent them. ACFE has a complete guide for businesses for anti-fraud training of their employees and customers. A study states that ACFE has experienced a 38% decrease in fraud losses and a 33% reduction in fraud duration with this extensive training manual for organizations. 

Key Highlights of Fraud Awareness Week

Fraud Week has had significant results when raising awareness among businesses in the market. Speaking of results, startups and new players in the industry highly benefit by participating in these initiatives. Below are the key points that Fraud Awareness Week entails in its 7-day program.

The Significance of Reporting

Fraud detection is half the job, reporting it to the respective authorities is necessary to put an end to it. This is where businesses need to have a hotline or an effective reporting mechanism in place. It enables firms to file a report instantly, aiding significantly in the fraud prevention process. ACFE states that firms that have a hotline, detect fraud more easily than those without it. 

Additionally, businesses must develop a fraud reporting process within their communication and interaction channels. It not only helps in increasing transparency but also ensures fraud prevention much faster, which leads to minor losses overall. The stats speak the same, as firms that lack hotlines experience fraud duration of 18 months on average with double losses, rising to $2000k on average!

Strengthening of Internal Controls

Internal control and access is an essential measure of fraud detection. It is what fraudsters target the most to gain a pathway into core business operations. Although many anti-fraud controls are present in the market, the ACFE recognizes the measures below to be most effective in reducing fraud, with a good score of 50% reduction in fraud losses and duration. 

Setting up an internal audit department to streamline the internal flow of controls from higher officials to other resources within an organization is essential to strengthen internal controls. Moreover, having certification of management on every financial statement helps businesses develop a good anti-fraud strategy. Lastly, regular reviews of internal control distribution of core business areas such as operations, accounts, and transactions from the management are crucial to minimize fraud risk.

Modern Internet Fraud Schemes Awareness

Setting up a strong foundation to fight fraud starts with raising awareness of common internet fraud techniques fraudsters use to trick businesses and individuals alike. The main methods are:

  • Phishing
  • Trojan Attacks
  • Ransomware
  • Business Email Compromise (BEC) Attacks
  • Spyware
  • Fake Online Stores

Fraudsters utilize these techniques to exploit businesses or generate illicit revenue online. The cash they make from these strategies is used in other illegal activities such as terrorism financing, drug trafficking, and money laundering. 

Read more: Top 4 Ways to Reduce Chargeback Claims

Anti-Money Laundering Practices

Speaking of money laundering, it is necessary for businesses to set up protocols to regulate their income and expense streams. Complete verification of internal entities such as employees, business investors, and clients can help firms reduce money laundering attempts. It is one of the main topics of many fraud conferences during International Fraud Awareness Week. 

AML practices include proper verification, screening, and due diligence of every outside entity as fraudsters use shell companies to execute illicit activities. Moreover, risk assessment is also crucial when making transactions and entering new partnerships with other businesses. Lastly, complete employee training can help businesses strengthen their AML controls at all organizational levels. 

Identity Theft Prevention

Identity theft is the go-to strategy for attackers to exploit businesses. They get hold of the personal information such as IDs, usernames, and passwords of internal employees or officials to gain access to business operations. Many ways of identity theft prevention are part of Fraud Awareness Week. 

Biometric verification of employees and every other entity that interacts with online business systems to ensure genuineness. Confirming unknowns every time they call and claim to represent a legitimate business or stakeholder. Lastly, setting up complete network security within organizational networks with firewalls, anti-ransomware and spyware tools, and other detection software solutions to increase security. 

Why Do People Commit Fraud?

Many people ask a basic question during Fraud Week conferences, which is why, in the first place people commit fraud. They inquire about the main motive behind this practice that plagues digital channels. There are many reasons behind this act and it is not right to pinpoint a specific one. Personal life gains or issues can lead to committing fraud. Debts and desires can also be added to this list. Sometimes, people look for shortcuts to success in making large amounts of money, this can also be the reason they look for fraud gateways within business systems. 

Conclusion

International Fraud Awareness Week is a great initiative to raise awareness among businesses of prevailing fraud techniques. Highlighting key factors and possible loopholes within business strategies are the main topics of discussion during Fraud Awareness Week. The KYB is part of this initiative and aims to eliminate digital fraud using modern AI solutions that transform UBO and business verification. 

Contact us to get a complete walkthrough of how we can help your business become fraud-free.

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