Anti-Fraud Controls Vital for the Financial Sector

ANTI-FRAUD CONTROLS VITAL FOR THE FINANCIAL SECTOR

For the first time the Financial Services Authority have fined a firm for failures of anti-fraud systems and controls. Capita Financial Administrators were fined £300,000. This illustrates how crucial it is for regulated firms to have not only effective anti money laundering controls in place, but perhaps more importantly, effective rigorous anti-fraud controls. It was found that fraudulent payments had been made from clients’ funds and whilst it must be stressed that no client of the firm has suffered financial loss, clearly the firm has made good any losses in addition to the penalty.

This goes to emphasise that the financial implications go beyond making good clients’ losses. In today’s modern business environment more and more emphasis is quite rightly being placed on corporate governance and risk management principles so why don’t business prioritise security. There are many reasons but perhaps senior managers do not take responsibility for security seriously and do not consider security a core business function. Security is a vital aspect of overall risk management and a lack of effective anti-fraud controls can threaten the viability of a company.

Effective controls start with a realistic assessment of risk and the areas of potential threat. Once those threats are identified you develop effective countermeasures that are appropriate to reduce or remove the risk without compromising the business. Remember the maxim ‘Failing to Plan is Planning to Fail’.