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What Can Financial Services Organisations Do If They Suspect Staff Of Committing Fraud?

In business, employers place a great deal of trust in their staff. From giving them access to passwords to letting them handle customer accounts, they give team members a lot of trust, and in return they expect loyalty and hard work.

Whilst most team members are trustworthy, in some cases this trust can be misplaced, and team members can exploit their position and even commit fraud.

For financial services organisations, this can be a serious issue. Recent legal precedent has shown that organisations can be found liable for an employee’s fraud, even when they’re not conducting work for their employer.

Fraud for financial services organisations is also a costly business, with many firms facing not only the bill for the money stolen, but also penalties from regulators.

As such, financial services institutions need to be vigilant and take prompt action when they suspect fraud is being committed by employees. Here’s our guide to what to do if you manage a financial services firm and suspect an employee of committing fraud.

Gather Evidence

When you initially believe that an employee is committing fraud, the first thing you need to gather evidence. The issue could be an error, or you could have made a mistake. Take the time to gather proof that your employee has done something wrong before you take the matter further. Be discreet so that no one suspects that you’re investigating and draws their own conclusions.

Contact Other Members of The Firm’s Senior Team

Once you have evidence that fraud or a breach of your company’s policy has been committed, you need to share this with fellow members of your business’s senior team. Communicate with them and host a meeting to go over the evidence and discuss the next steps.

Secure The Company’s Assets And Information

The next step is to stop your employee from being able to do any further damage to your organisation by securing its systems. Revoke any permissions that they have been given and suspend their accounts. Move all of their work over to another member of staff without informing either party of why this is being done.

Cooperate With Your Regulator

If the issue was reported to your firm by your regulator, or they believe that your company may have been complicate, then you need to make sure that you support them in their investigation but protect your organisation at the same time. Work with a team of regulatory defence solicitors, such as Axiom Stone, who have experience working with regulators such as HMRC and the Serious Fraud Office. A good team can advise you and help you to handle the issue in a professional and compliant manner.

Document Every Step Of The Process

Make sure that you keep a record of every stage of the process, from the moment that the issue is reported through to the time when the employee is dealt with and beyond. This will ensure that you have evidence of exactly what has happened should the issue need to be taken any further.

Involve Your HR Team

Work with your company’s HR team throughout the process of investigating and dealing with any incident of fraud, so that you know that your firm is compliant with relevant employment law no matter what action you decide to take. If your firm is small and does not have HR experts capable of handling this matter, bring in an outsourced HR team to support your organisation and make sure it acts in a proper and compliant way at all times.

Consider What Outcome Will Be Best For Your Business

The next major decision that needs to be made is what the best outcome is for your organisation. If the amount of money or information taken was small and can either be replaced or already belongs to your business, then it might be more cost and time efficient not to pursue the matter legally, but instead simply fire the employee and refuse to provide a reference. You could also pursue a civil case to recoup the money from the individual who committed the fraud. If, however, the money was stolen from client accounts, or the sums in question are vast, then your company may need to take the matter further and involve outside organisations.

Support Other Employees

Throughout your investigations, your other team members will be suspicious and curious. It’s important that you work with your HR team to make staff feel supported, whilst not giving them any more information than they are entitled to. If the employee or employees who committed fraud have a lot of responsibilities, then work with temporary staffing agency to find qualified replacements who are properly vetted. You might also need to rearrange your firm’s internal arrangements and the responsibilities of your existing team to accommodate the changes in staffing.

Contact The Police If Necessary

Should your firm decide to take things further, you may need to involve the police, for example if your company intends to claim the money back through its insurance policy or pursue a court case. In this case, you need to report the issue to Action Fraud, a police organisation that will log the crime and take necessary steps to support your firm in the action that it takes in the future.

Make Changes To Your Company’s Policies

Following a case of fraud in your company, you and your senior team need to make changes to the way your business operates. Safeguarding your business against employee fraud can be a challenge, but it is crucial to ensuring that your firm is protected in the future and reduce the chances of another fraud being committed again.


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