Countering fraud through compliance


With increasing fraud and corruption, striking the compliance chord is paramount in today’s business environment. This is prompting companies to educate all stakeholders about these rising threats and mitigate future risks.


Through the globally recognized International Fraud Awareness Week 2016, we hope to drive awareness on emerging risks, improve anti-fraud measures to counter them and encourage the larger industry to be custodians of ethics and sound governance. Backed by the Association of Certified Examiners (ACFE), world’s largest anti-fraud organisation, Fraud Week is a dedicated week to drive cognizance about the impact and repercussions of fraud. Held from 13 – 19 November this year, this is an apt time for anti-fraud professionals step up in their roles as custodians of sound corporate governance.

Our latest newsletter, Fraud and beyond highlights some key trends making news this year. Some of these include:

  • C-suite battling cybercrimes – Cybercrime is perceived as the one of the fastest growing fraud risks in India. As per EY’s survey, Shifting into high gear: mitigating risks and demonstrating returns, 40% of the respondents from India stated their concern on cybercrime. There has also been an uptick witnessed in cases of cyber-crime across industries and involve cases of phishing, spoofing, card skimming and ransomware to name a few. A key trend which has emerged is how C-suite executives are increasingly being targeted, as they tend to more inclined to pay any ransom money to retrieve confidential data.
  • Compliance with food safety standards – The quality of products across diverse food brackets has seen immense discussion lately. While access to safe and hygienic food is a basic right, there have been many questions raised on the quality and compliance with pre-determined standards. Reports suggest that India has close to 3.5 million food business operators, with a significant number being in the unorganized sector. Therefore, food operators need to ensure that their internal processes are robust and seal any gaps.
  • Anti-money laundering efforts – Global economies have been grappling with challenges around siphoning of money to off-shore locations and rising cases of terrorist financing. This, in the form of unaccounted or illicit wealth, commonly referred to as “black money,” poses a risk for India as well. However, the Government has taken a number of positive steps e.g. the Income Declaration Scheme, which resulted in a black money disclosure of INR 65,250 crore. Additionally, the recent announcement of demonetizing INR 500 and INR 1,000 currency notes will help boost India’s anti-money laundering efforts by uncovering domestic black money and curbing the circulation of counterfeit currency.
  • Security breaches at ATM or point of sale machines – There has been a notable rise in ATM security breaches, which have impacted not only the financial services sector, but also the general public at large. Recent news reports have stated that almost 3.2 million debit cards across different banks have been compromised. Some of the key reasons include financial institutions targeted by cybercriminals for disruption of business operations and cloning of cards at ATM or point of sale machine. Many people also use the same passwords across their email, social media profiles and bank accounts, which further increases the risk of a security breach.

To conclude, fraud risks will continue to rise and become more complex. But companies and its stakeholders must try and arrest this problem through various measures. Deployment of forensic tools and techniques, investments in internal controls and frameworks, regular trainings and adequate monitoring of internal processes are some ways to tighten the noose on unethical conduct. Initiatives taken by the government around new regulations (Benami Transaction Act, Companies Act) and recently, the demonetization drive to boost anti-money laundering efforts are expected improve investor confidence and enable a more ethical way of conducting business.

Download our newsletter Fraud and beyond here.

Watch our video here 

Follow @EY_India and track #EYForensic for regular updates

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