Internal staff fraud on the increase

The CIFAS Staff Fraud Database has revealed a significant increase in the level of fraud committed by employees during 2012.

A 43% increase was seen across all types of staff fraud in 2012 compared to 2011.

Fraudulent attempts to obtain employment were a particular problem, with a doubling in this type of fraud in 2012.

CIFAS communications manager, Richard Hurley, said: “The damage done by fraudsters inside an organisation can impact upon balance sheets, customer confidence and staff morale.

“It can also lead to regulatory and legal punishments to organisations. The 43% increase in staff fraud witnessed in 2012 demonstrates, therefore, that some organisations have invested in better protection and controls — enabling them to identify and prevent more fraud.

“Some of the frauds, however, demonstrate that organisations remain vulnerable. While these types of fraud are thankfully less commonplace than fraud attempts from outside an organisation, the damage that they can cause is as serious, if not more so.”

Attempts to gain benefit by deception or manipulation while in a job remained a serious threat during 2012, with a 22% increase in cases of this kind.

The most common reasons for recording such frauds are the theft of cash from either a customer account, or directly from the employer.

CIFAS, staff fraud expert, Arjun Medhi, said: “Organisations have increasingly come to terms with the idea that the vulnerabilities within an organisation are as dangerous as those that outsiders might try to exploit.

“Combating these through improving controls, responsible monitoring, and sharing data and best practice in terms of prevention are therefore methods that responsible organisations are already using to counter such threats.”

Myhomemove subsidiary Premier Property Lawyers are a member of CIFAS. Operations Director Kevin Smith, said of the data: "It’s obviously a big concern that staff fraud is an increasing risk for firms.

“In order to protect our customers we have invested in a range of checks across all staff, new and existing, including CRB checks & Credit Checks where relevant.

“We remain surprised that no other Conveyancers have yet joined CIFAS because in addition to combatting internal fraud, the tools we are now using also allow us to identify potentially fraudulent clients and indeed Law Firms"

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