Increased risk of corporate fraud in the wake of COVID-19

Here are the scams you should watch out for

We are living in a time when procedures at the accounts department are being put to the test in earnest. Manual, informal processes are challenged when the distance between colleagues changes and grows. In our new digital day-to-day life, it is suddenly difficult to get answers to spontaneous check questions that are otherwise easy to ask.

Summer and winter breaks are peak season for corporate fraud. Regular personnel are unavailable, and nor are their experience and their gut instinct for how requirements and requests from suppliers and colleagues are normally dealt with. It is during these unusual times – planned holidays or emergencies, the effect is the same – that we are at greater risk of fraud.

The fraudsters await in the wake of COVID-19. Well aware of how companies have been forced out of equilibrium, ready to turn all that fear and uncertainty into cash. Staff at the accounts department are fooled, and the tricks become increasingly difficult to identify…

Pay attention to this:

CEO fraud
The fraudster claims to be the company’s CEO or a senior manager who is authorised to make purchases. The most common form of contact takes place via email, where a message encourages someone at the accounts department to make an urgent manual payment on account of the prevailing situation. This amount may vary depending on the strategy; it may sometimes be a small sum of money, or it could involve as much as SEK 400,000.

Aid fund
There are instances where fraudsters send an invoice, claiming to have donated the payment to a fund or aid organisation. Instead, this payment is made to a non-profits organisation with close links to registered fake companies. This procedure may involve a request from someone who appears to be an existing supplier, wishing to forward the payment referred to in the invoice on to another account. For your own protection, it is important for you to remain alert and take action directly if an existing supplier suddenly changes the receiving account for any payment.

Your information needs to be updated!
While the risks of telephone fraud have increased, postal and digital mailings that appear to have been sent by an authority have become increasingly common as well. The recipient is asked to update their contact details and sign something in order to update information or access the service – but this is not free of charge. Instead, the recipient receives a bill for a supposedly binding agreement costing thousands of SEK a year. Hundreds of thousands of postal forms are sent out every year, according to the police service’s national fraud centre.

In-house fraud
A lot of fraud is committed by external parties outside the company. However, new situations and working methods create opportunities that can turn staff dishonest. In-house fraud may, for example, involve payments or goods being ordered deliberately or incorrectly by an employee for their own use. Another common type of in-house fraud involves employees using people within their own private networks to supply services or products. Having large numbers of potential clients within a company, with unclear rights with regard to purchases, is often what makes it so easy to commit this kind of fraud.

Bank account fraud
Check the extent to which payments go to bank accounts. Bank accounts are protected in accordance with bank account confidentiality, which makes it very difficult to detect fraud relating to bank accounts. This is problematic on a retroactive level, because the funds are more or less impossible to trace once the payment has been made.

To summarise, a few tips:

  • Review the procedures and processes applicable for the assessment and management of business-critical risks. Carry out stricter checks on suppliers who present a significant risk.
  • Put a limit on people with purchasing rights. Make sure that these people know how the organisation defines its requirements with regard to what suppliers should do, and use a single tool throughout the entire organisation to ensure that these requirements are being met.
  • Introduce a specific procedure for payment approvals for the management team.
  • Use intelligent technology to check payments and suppliers, and take action as soon as there is any indication of something not been quite right.
  • Perform an analysis of your supplier register, and make active efforts to ensure that details are correct and updated.
  • Carry out a trust analysis of employees! Many employees are active within other companies – even though they do not always provide notification of this – and occasionally they may even play an active part in the work of a supplier or a direct competitor.

Avoid unneccessary risks and
unintentional mistakes