How Hard Is It to Prevent Frauds and Detect Suspicious Activity?

Since the jump online, financial institutions and their patrons have been victims of cybercriminals. In fact, financial organizations and all types of businesses can be susceptible to fraud. Fraud can take many different forms, but it can be split into three main types: misappropriation of assets, bribery, and false statements on financial statements.

Although this is the least expensive type of fraud researched, asset misappropriation makes up a majority of cases.

These are plans whereby an employed person steals from or takes advantage of their company.

Financial embezzlement counts among the smaller percentage of cases, but it costs the most on average.

These plans involve leaving out or lying about the information contained in a company’s financial report.

Corruption is in the middle, and such schemes occur when staff members use their power in business dealings to help themselves instead of their employers, which is against their duty. Extortion, bribery, and contradiction are all kinds of corruption.

Any organization, big or small, needs to make sure that it has a plan to prevent fraud. By putting in place different procedures and controls, you can reduce the amount of fraud.

6 Key Measures to Take to Prevent Fraud and Detect Suspicious Activities Before They Occur

Fraud detection is not as difficult as it sounds. By implementing the below strategies, you can ensure that your organization stays secure from fraud and related malpractices.

1. Get To Recognize Your Staff

People committing fraud often act in ways that show that they are planning to do so. By paying close attention to staff members, you can determine if there is a risk of fraud.

Managers need to understand their workers and be associated with them. Frequently, a shift in how you feel can alert you to threats.

It can also show problems on the inside which have to be fixed.

For instance, if an employee feels unappreciated by the company owner or angry at their supervisor, it might make the malicious actor perpetrate forgery as a chance to get back at them.

Any change in how an employee acts should make you pay particular attention to them. This could cut down on fraud and make the company a stronger, more effective workplace where employees are happier.

If you listen to staff members, you might also find other hints. Think about a 30-year worker who now is functioning for 60 hours per week rather than the standard 45 hours since two of their workers were let go.

During a conversation with the worker, it comes out that his sibling lost his job, and he and his family have relocated to the individual’s house.

This may be an indication that there is a chance of theft. Quite often, an executive who does something wrong is the one you least suspect. It’s important to talk to your staff members and then understand them.

2. Deploy a Reporting System

All people are influenced by awareness. Everybody in your company needs to be mindful of fraud risk policies, explaining the various malpractices and what happens when they happen.

People who want to cheat the system will realize that their management is observing, which should stop them. Employees who aren’t tempted to steal or defraud also will be told what signs to look out for.

Fraud can be stopped with the help of such employees. In fact, most suggestions come from people who work at the company, but clients, contractors, rivals, and people who know the fraudster are also significant sources.

Because many workers are afraid to tell their bosses about problems, you might want to establish a way for them to do so anonymously. Employees can use a tip helpline or a website to report fraud without risking their own identities.

3. Hire Experts and Tools You Can Trust

Several of the employees who work in your corporation, such as Certified Fraud Examiners (CFE), CPAs who are Certified in Fraud Forensics (CFF), and Certified Public Accountants (CPAs), can play a significant role in setting up fraud prevention rules and processes.

But not many of such specialists have the right kind of expertise or track record to provide the service for your requirements.

It is essential to be careful when employing financial advisers, fraud invigilators, and other experts who would have access to classified company details like banking information.

Ensure that these firms or people have a good reputation for providing exemplary service and being trustworthy.

So, you can be sure that your investigative assessments, essential financial advisory services, and internal control evaluations are thorough and that your data will not ever be leaked.

Another way, as per this Guide to Fraud Monitoring, is to deploy fraud monitoring tools – end-to-end software deployed wherever customers interact with your product or service.

They run under the hood 24/7, observing and assessing behavior and analyzing data, focusing on specific touchpoints – such as sign-up and payments.  

4. Incorporate Internal Control Systems

Internal controls serve as those plans or programs that your company uses to protect its assets, ensure its bookkeeping records are accurate and prevent and catch embezzlement.

The segregation of powers is a crucial aspect of internal control systems, making it less likely that someone will commit fraud.

For instance, a retail outlet has one man working the cash machine, one employee working on the sales floor, and an acting head.

One worker should add up the money and verify registered invoices while someone else makes the payment slip, and a third takes the payment to the financial institution. These steps can help show if there are any problems with the compilations.

One other internal control which can help stop fraud is keeping good records. Think about the instance from above.

When the sales receipts and the planning of the deposit account are written down in books, the company owner can check the books weekly or daily to make sure that the revenue receipts are put in the financial institution.

Ensure that all checks, sales orders, and receipts have numbers that go in orders.

Use a watermark that says “for deposit only” across all checks, require two signs on checks over a certain amount of money, and don’t utilize signature stamps. Also, watch out for new sellers.

People who steal money through billing schemes set up fake vendors and send payments to them, generally to a Post Office box.

Internal control systems should be constantly checked and updated to ensure they are working well and keeping up with changes in technology and other areas.

If you don’t have a system of internal control or a fraud protection scheme, you could perhaps contact a professional with knowledge in this field.

A specialist will look at the company’s guidelines and regulations, suggest the right programs, and help put them into place.

5. Screen Holiday Balances

When employees travel, they feel rejuvenated and have the opportunity to learn new things. And it’s natural for workers to want some time off.

However, some employees do not take advantage of their leaves. People who’ve not skipped even one working day in years might amaze you.

Even though these staff members could seem trustworthy, it may indicate that they possess something else to conceal and are afraid somebody will find out about their forgery when they’re out of their desk for some time.

It is also a wise option for a business to shift employees to different jobs. This way, a second worker can look over the work of the first to see if there was any fraud.

6. Be a Part of the Company’s Culture

As an aftermath of the COVID-19 outbreak, organizational culture has suffered a considerable blow both online and offline.

Now, even more than before, it’s crucial to place the focus back on how staff members treat each other and how one’s environment influences the work quality as a whole.

Employees are less likely to cheat or steal if they work in a good environment. There should be a transparent organization chart, documented processes and procedures, and honest ways of working.

An open approach can also be a great way to stop fraud because it makes it easy for employees to talk to management.

The people in charge of a company or organization should serve as role models and hold each employee responsible, no matter their position.


People genuinely willing to steal don’t care who they steal from. It can happen in big or small companies, different industries, and different parts of the world.

Fraud in the workplace can cause a company to lose a lot of money, pay a lot in legal fees, and lose its reputation, leading to the end of the company.

Having the proper methods in place could make it much less likely that fraud will happen or help cut damages if fraud has already happened. Another effective way to prevent fraud is to let employees know what the company’s rules are.

To stop fraud, it’s essential to follow the policy and ensure that the steps and consequences are followed when somebody is captured. The price to a company trying to stop fraud is far less than the expense of the forgery.

Photo by Mika Baumeister on Unsplash