Amid the recent revelations of fraudulent activity at two financial institutions in Jamaica, Brenton Williams, detective inspector at the Financial Investigation Division (FID), has shared key strategies for mitigating insider threats.
While addressing prominent businessmen and women yesterday (February 1) at the FID’s conference on ‘Widening the use of the Proceeds of Crime Act’, Williams shared that the Constabulary Financial Unit (CFU) and FID investigated 13 cases from 2019 to 2023, with evidence of employees being complicit in fraud. Of the 13 cases, there were five financial institutions, six Government entities and two private sector bodies.
The inspector further shared that the five financial institutions were defrauded J$223 million and US$205,000. As it relates to the six government entities, there was J$643 million and US$5,000 in monetary loss. The two members of the private sector had monetary losses of J$382 million.
In order to ensure their institutions are not compromised, Williams said employers should look out for employees who work odd hours, have unexplained financial gain, experiencing financial distress or those who are extremely friendly, because these characteristics may be indicators that they are committing fraud.
To mitigate insider threats, he recommended that financial institutions do the following:
Know your employees
When a person tries to open a bank account, they are often required to answer a series of questions such as their source of income.
Williams shared that in addition to gathering information about their customers, banks should try and gather information about their employees, putting systems in place where employees share their assets and liabilities with the institutions.
He shared that by doing this, the banks will be able to tell if an employee is living outside of their means and an investigation can be launched to see if they have acquired the funds legitimately.
Know your employee relatives and associates
Often times when money is defrauded, the fraudster will send money to their family members or associates that have an account at the institution they work for, to cover their tracks.
Williams shared that by getting to know the associates of your employees, if an employee sends the defrauded money to their relative or associate, it will be easier to trace.
Regular auditing (direct confirmation of balances in account)
In every financial institution, there are high levels clients who possess a more than average income. As such, they are often the target of these fraudulent events, because there is a believe that the missing funds will be less noticeable.
To prevent this from happening, Williams recommended frequent auditing and confirmation of account balances by these account holders.
Build closer relationship between financial institutions
Financial institutions operate independently of each other, but according to Williams, a closer relationship is needed to ensure that persons who are relieved for unethical behaviour are not re employed in the same sector.
“There are still some institutions that just want to operate in silos and it cannot work. You guys have to be a network, you have to share information, share knowledge about anything that you may have discovered,” said Williams.
Additionally, he encouraged institutions to clearly document and consistently enforce policies and control, invest in systems that test what is actually happening and not what should be happening, and make examples of unethical employees.
A robust investigative and compliance team was also recommended in addition to institutions learning from each others mistakes.