It is a sad fact of reality, but every business in the UK is at risk of financial crime. No matter if you are a global financial institution or construction company, it is important to remain vigilant and take steps to mitigate your risk. 

When considering how to prevent financial crime, there are a number of important points that you and everybody else within your business should take into account. By doing so, you can ensure you are as prepared as possible should the worst happen.

What is Financial Crime?

Before we discuss how to prevent financial crime, we will first of all outline what the term actually means. Put simply, it is criminal activity that is carried out by individuals or organisations to provide certain economic benefits.

The term ‘financial crime’ is commonly considered to cover the following offences:

  • Electronic crime
  • Fraud
  • Bribery and corruption
  • Information security
  • Money laundering
  • Market abuse and insider dealing
  • Terrorist financing

When it comes to businesses, there are three most common ways in which financial crime can take place. The first one involves leaders or senior executives misreporting or manipulating financial data in order to misrepresent the firm’s true financial position. This does not just apply to company directors either, as employees of all ranks could attempt to steal business funds or other assets. Financial crime can also be carried out by a customer, supplier, contractor, or even a third party with no connection to the firm at all. 

How to Prevent Financial Crime

Now that we have defined what financial crime actually is, here are several ways in which you can protect your company from falling victim:

Understand the Legalities 

It is essential that you first of all know all of the laws that apply to financial crime. Every business in the UK is subject to several pieces of legislation, such as the Proceeds of Crime Act 2002, Terrorism Act, and the Bribery Act 2010. Many firms will also fall within the “regulated sector” and therefore be required to comply with the Money Laundering, Terrorist Finance and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).

It is essential that you understand all of the legislation that affects your business, register with the appropriate supervisory authority, and ensure you have policies and procedures in place that satisfy your obligations.

Conduct a Thorough Investigation

The most effective policies are the result of well-thought out risk assessments. We understand that companies will have finite resources, however focusing on the key risks your firm faces is essential. If you are able to get your risk assessment right, and then ensure all recommendations are carried out holistically, you will have a much greater chance of preventing financial crime.

magnifying glass on green table

Another option is to seek out the expertise of a specialist forensic accountant. They will carry out a thorough assessment of your company and outline the various risks you face, before recommending the best ways to keep you as secure as possible. They can also help you identify potential warning signs so you can take preemptive measures. 

Get Everyone Involved 

Preventing financial crime is not just a job for company directors, the legal department or Human Resources. It is a joint effort that requires cooperation from everybody within your organisation.

Senior management should perhaps look at creating proper statements of ethics and structures that create rewards for compliance, rather than unveil bureaucratic policies that nobody really pays attention to. It is also a good idea to make cross-unit groups that involve representatives from all departments within your business. Doing this will ensure that risks emanating from the different areas of your company can easily be identified and addressed.

Have Relevant Policies 

Just like most things in business, there is no one-size-fits-all approach to preventing financial crime. The best ones will come as the result of a thorough risk assessment investigation. For example, you should analyse which customers are the highest risk, what due diligence should be carried out on them, and provide easy-to-follow guidance on what to do if your suspicions are raised. 

Check External Parties

As mentioned previously, your company can also be susceptible to financial crime from external sources, such as clients or contractors. It is therefore essential to conduct thorough due diligence with everybody you do business with.

This is particularly important for those in your supply chain who might be “associated persons” when it comes to the Bribery Act and CFA purposes. In addition, your contracts should properly state you are requiring people to comply with relevant laws, and do so in a way that is easy for them to understand.

Keep an Eye Out for Changes

The legal world never stands still, it is in a constant state of evolution. This is especially true for financial crime legislation. Things may also change within your company, such as entering into a new business line or geographical area. Because of this, you should regularly check your financial crime policies and procedures to ensure they remain fit for purpose.

Tackle any Problems 

If you do encounter evidence of financial crime, it is essential that you do not try and sweep it under the carpet. While reporting breaches to the relevant regulators and authorities will not see you go unpunished, the repercussions will usually be less severe if you sound the alarm yourself and take appropriate steps to address the problem.

How Inquesta can Help

If you suspect or become aware of any sort of financial crime, it is important to seek professional assistance as soon as possible. Inquesta offers a director-led and independent investigation service that will:

  • Help you manage the situation
  • Assist with tracing key financial records
  • Gather and provide evidence 
  • Assist in the recovery of misappropriated funds and mitigate your losses

We have a wealth of experience in interviewing potential witnesses and suspects, meticulously analysing vast amounts of financial information, and reconstructing financial records that have not been organised properly – or at all.

Inquesta is committed to putting the needs of our clients first at all times, and achieving the best possible resolution for them. This gives you the peace of mind you need that you are working with a company that has your best interests at heart.

To find out more about how Inquesta can help you, contact a member of our team or request a free consultation