Cifas releases ‘Employee Fraudscape 2016’ featuring special report into whistleblowing

13th September 2016

Cifas, the not for profit membership organisation that specialises in collecting and sharing data on fraud and financial crime, has published ‘Employee Fraudscape 2016.’ It provides detailed analysis of the latest trends in internal fraud and highlights threats and vulnerabilities that organisations need to be aware of. It features a special report into whistleblowing and fraud in financial services after PCaW and Cifas collaborated in researching attitudes towards, and experiences of, whistleblowing in the financial sector.

Dealing with the repercussions of fraud is a difficult task so it is vital that firms try to prevent it in the first place. Cifas highlighted several ways that firms can achieve this with management playing a key role. Thoroughly vetting current and potential employees can ensure that those motivated to commit fraud are not given the means to do so, while clear and well communicated procedures for accessing company IT systems and spotting potential malware threats can ensure employees do not unwittingly expose firms and their clients to potential risks.

A key method to reduce exposure to fraud requires the participation of staff and management alike: promoting a strong anti-fraud culture. As with most efforts to elicit robust attitudes towards wrongdoing, whistleblowing plays an important role. Cifas say a crucial part of this is making sure staff know how to report concerns and that they will be supported when they do. Staff are often in the best position to spot fraud and limit its impact at the earliest opportunity. Cifas promote the use of dedicated whistleblowing lines where staff can voice their suspicions as a vital source of information for when fraudsters have evaded internal controls and audits. Cifas explain how such mechanisms can allow whistleblowers the chance to raise their concerns anonymously. We do not encourage, though by no means rule out, such an approach on our advice line as it can make it harder for investigators to request further information as well as making it more difficult for the whistleblower to avail themselves of the legal protection afforded by the Public Interest Disclosure Act.

Many of the statistics contained within the whistleblowing report conveyed a positive attitude towards whistleblowing. Of those questioned 75% who had witnessed wrongdoing or malpractice said they had reported it. This is slightly higher than our own findings which surveyed attitudes across all sectors: 2013’s results found 66% of those who had witnessed wrongdoing reported it, this fell to 59% in 2015. We have found a similar decline in the percentage of respondents willing to raise concerns: 85% in 2011 fell to 83% in 2013 and then to 81% in 2011. Though the drop is not drastic, the fact the reduction is continuous is significant and suggests there is still work to be done to encourage more people to come forward. Cifas found no overall consensus among those surveyed about what would make them feel more comfortable about whistleblowing, suggesting a range of measures are needed. Helpfully, Cifas include a checklist for organisations to ensure their whistleblowing policies successfully promote an open reporting culture. The list features measures in line with PCaW’s Whistleblowing Code of Practice such as clearly defining who has responsibility for whistleblowing, ensuring confidentiality and feedback to whistleblowers where possible and taking sanctions against those who victimise staff for raising concerns. It is also important to guard against complacency; measures such as regular audits help to identify where oversight is lacking and can spot trends signifying room for improvement.