Bribery and corruption remains one of the most serious economic crimes to affect South African businesses, organisations and government departments – but it doesn’t have to be that way.
Automated lifestyle assessment and fraud detection tools offer a solution for businesses to identify employee fraud and vendor collusion, and often prevent it before it happens.
Information and insights company TransUnion has partnered with forensic technology firm Corporate Insights to provide a Lifestyle Assessment solution. It uses advanced analytics that draw on a wide range of data sources linked to employees and suppliers to detect the tell-tale signs of fraud and corruption and mitigate – and in many cases, prevent – economic crimes.
The solution uses big data to flag signs of fraud in three key areas: employees, procurement and recruitment processes. This includes detecting and reporting signs of financial distress for employees, sudden changes in asset ownership (including property and vehicles), and potential collusion and conflicts of interest between employees and suppliers.
Hans Zachar, head of emerging markets at TransUnion Africa, says companies generally only identify fraud and corruption after it has already taken place, and then often have to spend significantly more than the original amount lost on investigations and other remedial activities.
“The challenge most leaders face is the lack of information to reliably and continually assess their company’s vulnerability to corruption and reputational risk. Organisations need to quickly and proactively categorise risks across their entire operations, and cut the cost of fraud investigations by reducing dependence on costly traditional solutions,” said Zachar.
South Africa has one of the highest rates of economic crime in the world. According to PwC’s Global Economic Crime and Fraud Survey 2020, 60% of South African organisations have experienced economic crime, 13% higher than the global average of 47%. Approximately 7% of respondents who experienced fraud in the last 24 months reported losing more than $50 million, with 4% reporting direct losses in excess of $100 million.
“Are people living beyond their means? Do they have undisclosed wealth and income, or undisclosed commercial relationships with vendors? Are employees using cellphones that mimic crime syndicate behaviour? Are IDs being misrepresented, and does the payroll contain ghost employees? By using this automated lifestyle solution, which is POPIA compliant and respects the privacy of employees, organisations can pick up any unusual activities immediately, and focus their anti-fraud, compliance and risk activity early to mitigate risks,” said Siham Boda, CEO of Corporate Insights.
Whereas traditional lifestyle assessments can take weeks and cost tens of thousands of rands, this innovative solution can cost effectively process entire organizations in less than a day. This automated solution provides forensic, risk and compliance teams with information they can take decision upon rather than having them focus resources on time consuming data collection and analysis.
This offers immediate benefits to organisations including the ability to reduce their losses through fraud and corruption; reduce the cost of managing and investigating fraud; prevent reputational risk by reducing fraudulent activity in the business; and continuously monitor, identify and accurately report hotspots in the organisation.
Shockingly, 42% of respondents to the PwC Survey didn’t investigate fraud at all. More than half of incidents were not disclosed to the board, 72% were not disclosed to the auditors and 66% were not disclosed to regulators or law enforcement.
“Automated lifestyle assessment, using the latest techniques and technologies around advanced analytics, data, information insights and machine learning, enables organisations to stay one step ahead of the fraudsters,” concluded Boda.