At its core, white collar crime is no different from other forms of crime, whether it’s blue collar or street-related – the perpetrators have to cover their tracks. And over the years, white collar professionals have become far more adept and sophisticated in their efforts to stay out of sight.
They will continue to find new ways to stay anonymous as technology evolves. But of course, technology often presents itself as a double-edge sword, and that means new ways of catching fraudsters will emerge as well.
With that said, we’re here to discuss some of the most recognized techniques white collar criminals use to disguise themselves. Keep them in mind. They may help you guide your fraud detection efforts in the future.
Finding the Footprints In The Sand
Failure to notice fraud schemes often happens when there are no systems or controls in place to prevent them in the first place (more on this later). But the other side of the issue comes from not knowing what to look for when threats of fraud arise.
Many organizations can save time, effort and resources (not to mention money) if they were able to pinpoint the vices these criminals rely on. This is even more true for companies that may lack the infrastructure or tools needed to conduct system-wide analysis.
Typical Methods Of Concealment
The Association of Certified Fraud Examiners (ACFE) has compiled a list of the typical methods used to disguise white collar crime.
- Creation of fraudulent physical documents – According to ACFE, 55% of fraudsters create fraudulent physical documents to conceal their illicit activities.
- Altering physical documents – 48% of those engaged in white collar fraud take existing documents and change the information recorded on them.
- Creation of fraudulent transactions in the accounting system – As much as 42% of those involved with white collar crime input fraudulent transactions within an accounting system (most likely to cover stolen or misappropriated funds).
- Altering transactions in accounting systems – As many as 34% of those who participate in white collar crime will manipulate transaction data and figures recorded in accounting software.
- Altering electronic documents or files – 31% of white collar fraudsters have will manipulate the data on electronic documents.
- Destroying physical documents – Up to 30% of white collar criminals will completely destroy physical documents to rid themselves of any paper trail that could blow their cover.
- Create fraudulent electronic documents – As many as 29% of corporate fraudsters will create fake electronic documents as a means to distract their colleagues from the real data.
- Create fraudulent journal entries – Up to 27% of those involved with white collar crime will create fake journal entries to disguise the true record of their daily activities.
Fighting Fire With Fire: Discovering White Collar Crime Through Better Processes and Proactive Analytics
Ultimately, the question that comes with the knowledge of these concealment techniques remains. How can they help you catch those committing white collar crime?
It’s one thing to know what criminals do, but it’s another thing to know how to use it against them. The answer for catching those criminals lie in the very methods they use to disguise themselves.
Creation Of Fraudulent Documents/Transactions/Entries
One of the best ways to detect fraudulent documents or transactions is to create a standard format for these types of data. Formatting here will no doubt apply to things like consistent fonts, spacing, phrasing or numerical units.
However, it can also refer to the time when specific pieces of data are to be submitted, to whom they are to be submitted and for what purpose.
The more systematic you make data submission, the harder you’ll make it for criminals to slip through undetected. At some point, they will likely miss a detail and make a mistake that leads to their discovery.
Altering of documents/transactions/files
Documents that already exist and get tampered with may slip through the cracks, especially if staff members don’t actively review them. The key to solving this problem, first and foremost, is to develop a habit of frequently reviewing important documents. But another step is to use a proactive data analytics tool that detects data inconsistencies. This is especially important for digital documents.
For example, if a fraudster tampers with invoice information on a document, a data analytics tool will detect the discrepancies and report it. With our GLAnalytics solution, you can proactively run reports on all submitted data to see if there are inconsistencies which may require your attention.
Destruction of files
When it comes to the outright destruction of files, there’s not much that can or needs to be done when it occurs. Of course, the easiest way to avoid completely losing stored and shared documents is to have backups and multiple copies saved on different devices or online accounts (ie. cloud services).
Put Your Defenses Up
White collar crime and their fraud schemes will continue to occur, and they will appear in new ways. It’s impossible to stop them completely because we can’t see what goes on in the mind of a criminal, let alone control their thoughts or actions. However, our response to their tactics is totally within the realm of our control.
With an understanding of how fraudsters conceal their activities, it’s possible to be on the lookout for these signs and put controls in place to find them. With tools such as our GLAnalytics solution, you can proactively monitor your documents and data for changes or unusual patterns in their presentation. With that kind of surveillance in place, fraudsters will have a harder time of remaining hidden.
