Fighting Fraud: How to Establish and Manage an Anti-Fraud Program

Front cover......Page 1
Fighting Fraud......Page 4
Copyright page......Page 5
Quotation......Page 8
Table of contents......Page 10
Preface......Page 20
Acknowledgments......Page 24
Introduction and Premise......Page 28
SECTION I: AN INTRODUCTION TO THE WONDERFUL WORLD OF FRAUD......Page 30
INTRODUCTION......Page 32
GLOBALIZATION OF BUSINESS — BENEFITS TO NATION-STATES......Page 34
EXPANSION OF THE GLOBAL MARKETPLACE AND THEIR AREAS OF OPERATIONS......Page 35
CORPORATE OWNERS AND LOCATIONS......Page 36
CORPORATE PRODUCTS......Page 37
THE HIGH-TECHNOLOGY FACTOR......Page 38
NANOTECHNOLOGY......Page 40
ADVENT OF THE SUPERHIGHWAYS......Page 43
THE IMPACT OF SUPERHIGHWAYS ON FRAUDS AND OTHER CRIMES......Page 44
A SHORT HISTORY OF FRAUDS AND OTHER CRIMES VIA THE I-WAY......Page 46
SUPERHIGHWAY FRAUDS AND OTHER CRIMES TO I-WAY ROBBERIES......Page 47
I-WAY ROBBERY — ITS PREVALENCE......Page 49
GLOBAL CONNECTIVITY VIA THE I-WAY = GLOBAL EXPOSURE TO ATTACKS BY FRAUD-THREAT AGENTS AND OTHER MISCREANTS......Page 50
CAPABILITIES AND LIMITATIONS OF LAW ENFORCEMENT......Page 51
CHALLENGES TO SECURITY PROFESSIONALS AND OTHERS......Page 52
CASE STUDY 1......Page 53
CASE STUDY 2......Page 54
SUMMARY......Page 55
INTRODUCTION......Page 56
DEFINITION OF GENERAL FRAUD......Page 57
SPECIFIC FRAUD DEFINITIONS......Page 60
CORPORATE ASSETS......Page 61
OTHER TERMS AND DEFINITIONS......Page 62
CASE STUDY......Page 63
SUMMARY......Page 64
INTRODUCTION......Page 66
SOME U.S. FEDERAL FRAUD-RELATED LAWS......Page 67
A FEW EXAMPLES OF U.S. FEDERAL ENFORCEMENT OF FRAUD-RELATED LAWS, APPROACH AND ACTIONS......Page 69
MAIL FRAUD STATUTES (CONDENSED AND PARAPHRASED)......Page 70
CIVIL LITIGATION......Page 72
ROLE OF PHONE COMPANIES......Page 73
EU FIGHT AGAINST FRAUDS......Page 74
ASIA AND FIGHTING FRAUD......Page 76
CASE STUDY......Page 77
SUMMARY......Page 79
ARE DEFRAUDERS A PRODUCT OF THEIR ENVIRONMENT, OR IS IT IN THEIR GENES?......Page 82
SOME CRIMINOLOGY THEORIES......Page 83
HUMAN ERRORS — ACCIDENTS......Page 85
POTENTIAL FRAUD-THREAT AGENTS......Page 86
CAPABILITIES......Page 93
MOTIVATION......Page 94
ACCESS......Page 96
CATALYSTS......Page 97
INHIBITORS......Page 98
AMPLIFIERS......Page 100
CASE STUDY......Page 103
SUMMARY......Page 107
INTRODUCTION......Page 108
ROLE OF EXECUTIVE MANAGEMENT......Page 109
ROLE OF CORPORATE MANAGEMENT......Page 111
ROLE OF THE ETHICS DIRECTOR......Page 112
ROLE OF THE AUDITOR......Page 113
ROLE OF THE FRAUD EXAMINER......Page 114
ROLE OF THE CHIEF SECURITY OFFICER (CSO)......Page 115
WHY THE CORPORATE SECURITY PROFESSIONAL?......Page 116
SUMMARY......Page 117
INTRODUCTION......Page 118
TYPES OF FRAUD SCHEMES......Page 119
FINANCIAL......Page 120
CREDIT CARD SKIMMING......Page 124
MORTGAGE FRAUDS......Page 125
COMPUTER AND TELECOMMUNICATIONS FRAUDS......Page 126
ATM FRAUDS......Page 130
CLICK FRAUD......Page 133
CLIP-ON FRAUD......Page 135
SECURITIES FRAUDS......Page 136
IDENTITY THEFT SCAMS......Page 137
“NIGERIAN SCAM”......Page 138
ACCOUNTING FRAUD SCHEMES......Page 140
PURCHASING — FOUR BASIC CATEGORIES......Page 145
INVENTORY......Page 146
INVESTMENTS AND FIXED ASSETS......Page 147
PAYROLL AND PERSONAL EXPENSES......Page 148
TELEMARKETING FRAUD......Page 149
COMMON HEALTH INSURANCE FRAUDS......Page 150
PRIME BANK NOTES......Page 151
PYRAMID SCHEME......Page 152
CASE STUDY......Page 153
SUMMARY......Page 154
ACTUAL FRAUD AND FRAUD-RELATED CASES......Page 156
PHISHERS AND TAXPAYERS......Page 157
FRAUD BY CORPORATE EXECUTIVES......Page 158
FOREIGN EXCHANGE TRADING FRAUD......Page 160
ORGANIZED CRIME AND CYBERCRIME......Page 161
COMPUTER HARD DRIVES LEAD TO FRAUDS......Page 162
DEBT-COLLECTING FRAUDS......Page 163
GOVERNMENT CONTRACTING FRAUD......Page 164
FRAUD-THREAT AGENTS CAN BE ANYONE IN ANY POSITION......Page 165
U.S SECURITIES AND EXCHANGE COMMISSION (SEC) FIGHTING FRAUD......Page 166
FRAUD IN SCHOOL SYSTEMS......Page 167
ANOTHER EXAMPLE OF INSIDER FRAUD......Page 168
EXECUTIVE MANAGEMENT AND ACCOUNTING FRAUD......Page 169
MERCHANDISE RECEIPT AND EXCHANGE FRAUD......Page 170
MORTGAGE FRAUD......Page 171
GOVERNMENT CONTRACTORS AND FRAUD......Page 172
Y2K-RELATED FRAUD......Page 173
DATA STORAGE CONDUCIVE TO FRAUD-THREAT AGENTS......Page 174
PYRAMID SCHEMES MOVE ON TO THE INTERNET......Page 175
PREPAID CELLULAR PHONE FRAUD......Page 176
IDENTIFYING INTERNATIONAL CORRUPTION......Page 177
CREDIT CARD INFORMATION THEFTS AND FRAUDS......Page 178
HACKERS, CRACKERS, PHISHERS, OH MY!......Page 179
MEDICAL RESEARCH FRAUD......Page 180
CORRUPTION AND THE WAR IN IRAQ......Page 181
LOBBYISTS AND CORRUPTION......Page 182
FAKING A MEDICAL CONDITION......Page 183
INTERNET FRAUD SWEEP......Page 184
SOCIAL SECURITY SCAM......Page 185
STAMP FRAUD......Page 186
ACCOUNTING FIRM FRAUD......Page 187
ANOTHER MENTION OF THE “NIGERIAN” SCAMS — VARIATIONS ON A THEME......Page 189
SUMMARY......Page 190
SECTION II: ESTABLISHING AND MANAGING AN ANTI-FRAUD PROGRAM......Page 192
IWC BACKGROUND INFORMATION......Page 194
KEY ELEMENTS FOR THE CSO TO CONSIDER......Page 197
GETTING TO KNOW IWC......Page 198
STRATEGIC BUSINESS PLAN......Page 199
TACTICAL BUSINESS PLAN......Page 200
IWC AND THE HISTORY OF ITS CSO......Page 202
IWC’S DEPARTMENTS OF PRIMARY IMPORTANCE TO THE CSO......Page 205
IWC VISION, MISSION, AND QUALITY STATEMENTS......Page 207
PLANS......Page 209
CASE STUDY......Page 210
SUMMARY......Page 211
INTRODUCTION......Page 212
IWC’S ANTI-FRAUD PROGRAM......Page 214
ANTI-FRAUD PROGRAM PROJECT PLANNING......Page 218
IWC ANTI-FRAUD PROGRAM PROJECT MANAGEMENT AND PLANNING......Page 221
ANTI-FRAUD DRIVERS — THE FIRST MAJOR TASK IN ANTI-FRAUD PROGRAM DEVELOPMENT......Page 224
RISK ASSESSMENT — THE SECOND MAJOR TASK IN DEVELOPING AN ANTI-FRAUD PROGRAM......Page 225
BASICS OF IWC’S RISK ASSESSMENT PROCESS......Page 226
THREATS......Page 228
MAN-MADE THREATS......Page 229
VULNERABILITIES......Page 230
ASSETS PROTECTION RISK ASSESSMENTS......Page 231
DEVELOPING ANTI-FRAUD DEFENSES......Page 233
THREE KEY INGREDIENTS IN AN ANTI-FRAUD PROGRAM’S DEFENSES......Page 234
IWC’S ANTI-FRAUD POLICIES......Page 235
ANTI-FRAUD REQUIREMENTS AND POLICY DIRECTIVE......Page 238
ANTI-FRAUD PROCEDURES......Page 239
RECRUITING ANTI-FRAUD PROFESSIONALS......Page 241
CASE STUDY......Page 242
SUMMARY......Page 243
INTRODUCTION......Page 244
CSO LEADERSHIP......Page 245
MANAGEMENT VERSUS LEADERSHIP......Page 246
MEETING CUSTOMERS’ EXPECTATIONS......Page 247
IWC EXTERNAL CUSTOMERS......Page 248
IWC EXECUTIVE MANAGEMENT EXPECTATIONS OF A CSO......Page 249
MANAGING RISK......Page 251
PLANNING......Page 252
SOME ASPECTS TO INCORPORATE INTO AN ANTI-FRAUD PROGRAM PLAN......Page 254
BUDGETING......Page 256
CONTROLLING......Page 259
PROCESS MANAGEMENT......Page 261
PERFORMANCE MANAGEMENT......Page 262
USING TECHNOLOGY TO DELIVER ANTI-FRAUD PROGRAM SUPPORT AND SERVICES......Page 263
WHAT IS RISK MANAGEMENT AS IT RELATES TO IWC’S ANTI-FRAUD PROGRAM?......Page 264
MANAGING AND REDUCING RISKS TO CORPORATE ASSETS......Page 265
PROGRAM FOR MANAGING ANTI-FRAUD DEFENSIVE RISKS......Page 266
RESPONDING TO FRAUD INCIDENTS......Page 269
MANAGING FRAUD THREATS......Page 270
CASE STUDY......Page 271
SUMMARY......Page 273
ANTI-FRAUD PROGRAM TEAM BUILDING......Page 274
EXECUTIVE MANAGEMENT AS TEAM MEMBERS......Page 275
TEAMING WITH IWC EXECUTIVE MANAGEMENT THROUGH A BUSINESS APPROACH......Page 276
TEAMING WITH CORPORATE PEERS......Page 277
TEAMING AND DEALING WITH OFFICE POLITICS......Page 279
TEAMING WITH YOUR SECURITY MANAGERS......Page 281
TEAMING WITH YOUR SECURITY STAFF......Page 282
TEAMING AND DEALING WITH SATELLITE OFFICES IN FOREIGN LANDS......Page 286
CASE STUDY......Page 287
SUMMARY......Page 289
ANTI-FRAUD PROJECT TEAM FUNCTIONAL TASKS......Page 290
ANTI-FRAUD FUNCTIONS......Page 291
ANTI-FRAUD PROGRAM’S NON-SECURITY TEAM FUNCTIONS AND MEMBERS......Page 293
CASE STUDY......Page 294
SUMMARY......Page 295
INTRODUCTION......Page 296
MEASURING AN ANTI-FRAUD PROGRAM’S COSTS, BENEFITS, SUCCESSES, AND FAILURES......Page 297
COMMON LOE MEASUREMENT TECHNIQUES FOR EACH FUNCTION......Page 298
EXAMPLES OF METRICS BY FUNCTION......Page 299
INVESTIGATIONS AND NCIS METRIC CHARTS......Page 300
EXAMPLES OF ANTI-FRAUD INVESTIGATIONS METRICS......Page 301
PROCESS MEASUREMENTS......Page 306
CASE STUDY......Page 307
SUMMARY......Page 310
SECTION III: THE FRAUDULENT FUTURE......Page 312
INTRODUCTION......Page 314
EMPLOYEES OF THE FUTURE......Page 317
THE FUTURE GLOBAL CORPORATION......Page 318
FUTURE OF FRAUD ATTACKS ON CORPORATIONS......Page 320
FUTURE ANTI-FRAUD PROTECTION NEEDS OF CORPORATIONS......Page 321
SUMMARY......Page 322
HIGH-TECHNOLOGY FRAUDS......Page 324
HIGH-TECHNOLOGY ANTI-FRAUD DEFENSES......Page 327
CASE STUDY......Page 328
SUMMARY......Page 329
INTRODUCTION......Page 330
GETTING A FRAUD EDUCATION......Page 331
GAINING FRAUD-RELATED CERTIFICATIONS......Page 332
ASSOCIATIONS......Page 333
GAINING ANTI-FRAUD EXPERIENCE......Page 334
CASE STUDY......Page 336
SUMMARY......Page 337
INTRODUCTION......Page 338
SUMMARY......Page 339
WHAT OTHERS THINK ABOUT THE ANTI-FRAUD LEADERSHIP POSITION IN A CORPORATION......Page 340
TOBY J. F. BISHOP, CFE, CPA, FCA, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ASSOCIATION OF CERTIFIED FRAUD EXAMINERS WORLD HEADQUARTERS......Page 343
IN CONCLUSION — MY THOUGHTS......Page 344
SOME REFERENCES......Page 346
END OF LINE......Page 347
About the Author......Page 348
Index......Page 350