Financial Crime: What does it mean to Investec

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Financial Crime What does it mean to Investec?

• MLROs.com February 2007

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Financial Crime

• What should we consider?
• What is financial crime?
• What crimes or types of behaviour are covered?
• What should we do?
• What are our responsibilities?

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Financial Crime

• What is it?
• Definition?
• Common types of fraud
• False Accounting
• Money Laundering
• Corruption
• Asset misappropriation
• Investment Schemes
• Computer Fraud
• Intellectual property fraud
• Insurance fraud
• What is covered?
• Internal fraud and theft
• External attacks
• Money laundering
• Insider Trading
• Market abuse

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Financial Crime

• What are the risks?
• Reputational risk
• Financial risk
• Regulatory risk
• Legal risk

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False Accounting

• How would this effect Investec.
• To obtain for funding from the bank
• To raise share price or value
• To get performance related bonuses
• To cover original theft
• To hide losses

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Asset misappropriation

• How would this effect Investec.
• Identity theft/ account take over
• False expense claim
• Theft of company assets
• Theft of intellectual property
• Payroll fraud
• Advanced fee fraud
• Long firm fraud
• Cheque fraud
• Investment scheme fraud

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Computer fraud

• How would this effect Investec.
• Internet fraud
• Spam and virus
• Phishing
• Denial access
• Hacking

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Corruption

• How would this effect Investec.
• Political Exposed Person (PEPs)/ High net worth
  individuals
• Employees
• Clients

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Warning signs

• What to watch out for. (People)
• Management dominated by one person
• High turn over of accounting/financial staff
• Remuneration very heavily based on financial
  performance
• Low morale
• Employee life style
• Excessive hours worked
• Unprofessional or to closer relationship with
  customer/ supplier
• Grievances

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Warning signs

• How would this effect Investec. (Internal
  processes)
• Lack of pre employment screening
• Weaknesses identified but not corrected
• Poor authorisation processes
• Ability to override internal controls
• Poor cultural attitude to fraud issues

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Warning Signs

• How would this effect Investec. (External signs)
• Structure that are overly complicated
• Excessive use of jurisdictions
• Overly complex transactions
• Failure to identify ultimate beneficial owners
• Lack of understand regards clients business
• Clients profile changes for no apparent reason
• Share prices that are either to high or to low
  for market conditions

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Controls

• How can we protect Investec.
• Pre employment screening
• Appropriate sign off levels
• Segregation of duties
• Internal reporting systems and staff protection
• Staff training and awareness
• Annual fraud risk review
• Fraud considered in new product or process design
• Holiday policy
• Senior management responsibility

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Financial Crime policy

• What should be covered.
• That the policy applies to all levels
• Whether to company has a zero tolerance
• Define what financial crime is
• Conflicts of interest
• Gift and entertainment
• Internal reporting systems/ whistle blowing
  policy
• What employees should deals with incidents of
  financial crime
• Liaise with law enforcement
• Contingency plan for dealing with incidents.

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Financial Crime Policy

• What to do if a financial crime is discovered.
• Preserve all relevant documents. (Carefully place
  them in plastic folders)
• Preserve the scene where appropriate. (e.g. if
  employee suspected preserve desk contents,
  notebooks etc)
• Preserve any other office equipment believed to
  be suspected or used to facilitate fraud (e.g.
  fax machines etc)
• Ensure that the incident is reported to the
  appropriate senior member of staff
• Inform their relevant business unit manager
• If the method by which monies have been defrauded
  is identified, take immediate steps to safeguards
  further losses.
• Immediately attempt to recover funds. Consider
  blocking accounts. If the funds have left the
  bank make immediate contact with the recipient
  bank and seek assistance.
• Keep detailed notes of immediate action taken.
  In particular note telephone and fax numbers
  called with parties outside the bank.
• Remember immediate actions taken at the time the
  fraud is discovered prove to be the most
  effective at securing evidence and recovering
  funds.

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• Questions?

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• Simon Wilkin
• Fraud and Money Laundering Reporting Officer
• Email simon.wilkin_at_investec.co.uk
• Tel [phone]
• Fax [phone]