Financial Crime Incidents Investigation

The financial crime incidents investigation is necessary to be perform and be reported. The investigation process helps the management to gather the relevant evidence for analysis and corroboration to conclude the process with meaningful results.   

Investigations begin with a mere suspicion that a financial crime has occurred. The financial crime investigation process is not a standard police-type process because there is little initial available evidence that financial crime has occurred. However, in most cases, the financial crime leaves a trail or a series of indicators highlighting that a financial crime has occurred. 

Financial Crime Incidents Investigation

Identifying financial crime risk indicators is crucial in the investigation process, and the investigators plan to identify the crime indicators as early as possible. There are different categories of skill sets that are used during the investigation.

Law enforcement authorities may also investigate the financial crime where applicable legal provisions are breached. Law enforcement authorities perform various tasks such as collecting pieces of evidence and testifying the shreds of evidence in the relevant courts. Law enforcement authorities may work for the Federal Government or the State.

Police departments may also be involved in the fraud investigation process depending on the applicable local laws of the state and federal government. There may be situations where law enforcement agencies and police work together undercover. The nature of the investigation and involvement of agencies and police depend on the location of the fraud, the organization’s size, the fraudsters’ profile, and the legal provisions breached. 

During investigations, performing the research is an essential skill set required from the investigation team. It requires the experts to publicly source the required information concerning the individuals, employees, and entities suspected of involvement in the financial crime incident or activities. Identifying the right suspects makes the financial crime identification process easier and more structured.

A crime investigation team is required to quickly identify ownership structure, directors and Management profiles, negative media searches, bankruptcy and disqualifications, previous court cases and judgments, asset profile and locations, internal controls, and processes.

The fraud investigation team works per the defined investigation programs to obtain sufficient and appropriate evidence related to fraud incidents. The team explores different sources to gather such evidence as direct interviews with suspects, interviews of colleagues of the suspect, observation of the behavior of the particular employee or suspect, walkthroughs of transactions and systems, third-party confirmations, and physical checks or counting of physical assets, etc.

Transaction analysis or forensic audit is an important component of the financial crime investigation. Quantified and experienced professionals perform transaction analysis. It becomes a challenge when the suspects are themselves skilled accountants or professionals with sound knowledge of the company’s internal controls, processes, and financial system.

Forensic accountants will be needed to analyze the activities in organizations where such types of professional fraudsters work. Forensic accountants not only analyze the activities of professional fraudsters but also calculate the estimated losses and damages caused by the fraudulent acts of professional and skilled fraudsters. 

The search, seizure, and analysis of the electronic evidence stored in personal computers or information devices are utilized and used as computer forensic investigations. Computer forensic data can also be obtained from remote locations where the company uses cloud services.

The forensic investigators get access to the financial and other information virtually to analyze and assess the evidence and information. It is rare for modern-day fraud incidents to be identified without using data storage devices and computers, and for these reasons, computer forensics is a vital skill set. 

The important part of the fraud investigations is the fieldwork and the interviews of the persons and suspects, which can prove to be the conclusive evidence process. Information obtained during the interviews can become sufficient appropriate evidence. 

Final Thoughts

Over the last ten years, there has been a significant increase in the level of activity in financial-crime compliance in financial services, with regulators around the world taking scores of enforcement actions and levying $36 billion in fines. Many financial institutions have scrambled to put corrective measures in place. Financial-crime compliance (FCC) was elevated to the status of a function, frequently reporting to the chief risk or compliance officer. The first and second lines of defense’s staffing levels and organizational seniority were greatly increased. The resulting activity has cost large institutions hundreds of millions of dollars each year and has created a dynamic marketplace for consulting services and technological solutions.

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