Why fraud prevention training should be on your L&D agenda in 2024

The harm that fraud can do to an organisation is often overlooked and underestimated, and the repercussions can be far reaching. 

During Learning at Work Week (13-19 May), Rachael Tiffen, Director of Public Sector and Learning at Cifas, explores some of the consequences of fraud and why prevention is part of good governance – supporting an ethically and morally robust organisational culture, as well as protecting funds that the business and its staff are entrusted with safekeeping. 

Statistics show that fraud accounts for around 38% of all crime in England and Wales, with an estimated 80% being cyber related. Throughout the UK, we are experiencing what you might call a ‘perfect storm’ in relation to the current fraud picture; with increased financial pressures tempting some individuals to commit fraud, in combination with the vulnerabilities to fraud from the growth of remote working, which includes an increase in staff approaches.  

A recent survey of ours revealed that 1 in 8 (12%) UK adults have committed fraud in the last 12 months. The results revealed that the ‘most common’ types of fraud were falsifying CV qualifications (21%), dishonestly claiming Single Person Discount (21%), and committing gaming chargeback fraud (21%). The first fraud type will be of relevance to HR and L&D professionals, with misleading qualifications linked to the insider threat – a key risk to all organisations, and one that continues to grow. 

Embracing strong governance, upskilling opportunities, and an anti-fraud culture   

The types of fraud that could occur in an organisation can be better understood by undertaking a risk assessment of services, channels, and opportunities, alongside the fraud response that should be applied appropriately and proportionate to the risk. 

When it comes to governance, this sets the organisation’s tone, reinforcing the importance of, and establishing oversight responsibilities for, enterprise risk management. Having a fraud prevention policy is a key addition to the good governance toolkit. In truth, tackling fraud is everyone’s business within the organisation and the first line of defence remains critical. Therefore, it is important to embrace an anti-fraud culture where staff are encouraged to learn about how to detect and report incidents of dishonest conduct. 

The skills required to help tackle fraud can vary across an organisation and it is crucial to adopt a holistic approach throughout. Those staff that first encounter applications for services and products need to have a general awareness of red flags and what the fraud threats look like. This will help counter and identify dishonest actions from the outset and ensure a preventative approach stops fraud at the source or before it escalates. 

Additionally, whilst organisations verify information and have specific processes in place, they can also use data analytics and fraud prevention tools, such as the Cifas databases, to augment checks. When reviewing results and data, it important that an organisation has the expert skills to understand the information, decide whether investigation and further action is required, and protect innocent parties.  

Beyond those who are on the frontline, there will be other staff who can examine and collect evidence, compile information for the police, and even take cases to court. These staff who investigate and take cases to prosecution need to have the right qualifications and skills to carry out that work. If they are required to present evidence in court, then they must put together information which is admissible under the Criminal Procedure and Investigations Act 1996. 

Alongside the many accredited courses available for those that need to undertake specific duties, frontline staff must first have enough knowledge of tackling fraud to understand the right time is to refer a specific case, rather than muddy the waters by collecting evidence themselves. Not being up to date on procedures and legislation can have repercussions across the board. 

Supporting an organisation’s understanding of the Failure to Prevent Fraud offence 

When the Economic Crime and Corporate Transparency Act 2023 achieved Royal Assent on 26 October 2023, it signalled one of the biggest shifts in modern-day corporate criminal liability. The Act introduced some important areas for organisations to consider – including the ‘Failure to Prevent Fraud’ offence. Under this new offence, large UK corporations, subsidiaries and partnerships will be liable if fraud is committed by an employee or agent for the organisation’s benefit, and they didn’t have reasonable fraud prevention procedures in place. A ‘reasonable procedure’ listed is training. 

If convicted, the organisation is liable to an unlimited fine. Whilst this is a corporate offence, it would be hard to imagine that if a senior officer had not put procedures in place and a fraud was committed – that met the criteria in the Act – that no internal action would take place. The cost of examining what happened in a fraud case, what officers had done and rectifying the issues cannot be underestimated and may result in adverse publicity and reputational damage, not to mention serious repercussions to the lives of those involved.   

Critical checks protect workforces and influence a data-sharing ecosystem 

Fraud prevention training helps organisations to ensure that the checks they conduct are robust, accurate and followed through appropriately. Relevant training can also alert staff to red flags and empower them to assess risks and stop more fraud from the outset. It is a well-known fact that preventing a fraud offence is less costly – both financially and reputationally, as well as the additional cost of having to address everything after the event. Building in these procedures is important and having staff trained at different levels and in a form that is proportionate to their roles is key. General fraud awareness training for all staff is a good place to start, so that everyone in the organisation has a better understanding of fraud and can spot the warning signs. 

Overall, providing role-appropriate training in fraud prevention not only bolsters a workforce’s understanding of the current threats and trends, but means they can forecast any potential risks to effectively stop them – even before they occur. Whether employees have extensive, some or little knowledge of how to prevent fraud, providing learning opportunities and investing in the correct training requirements ensures staff remain ahead of the curve and organisations can protect their teams – ultimately, keeping everyone safe. 

As well as Fraud & Cyber Academy qualifications and specialist courses, we have launched a Digital Learning programme – an interactive video series equipping people with the tools needed to prevent identify fraud, first party fraud, insider threat, staff approaches, social engineering, bribery and corruption, and more. Find out more about our Digital Learning offering or try a free 7-day trial today.  

This article first appeared in Training Journal.