We all know the unfortunate truth that Fraud exists forever and in every economic model, industry and region. The Fraud Triangle is still alive, and it will without a doubt.
The anti-fraud professionals are constantly looking for prevention and reduction of fraud programs and controls, it is not an easy task. As anti-fraud professional we are always trying to find answers to help us to understand the motivations of fraudsters.
The fraud triangle consists in
The Pressure is usually the initial motivation behind the fraudster, the pressure can be personal greed, financial problems, addictions (alcohol, drugs, gambling etc.)
The Opportunity to commit fraud is a clear action of weak internal controls, abuse of position and power, it is the ability to manipulate, hide or alter the entity documents and control to perpetrate the action for it’s own benefit, and to deceive the organization or the public.
The Rationalization is the third stage of the fraud triangle, it is a cognitive state and requires the fraudster the need and ability to justify his crime, to justify the dishonest actions.
It is important to analyze and understand the psychological signs of fraudsters that can be immensely valuable when we are working in a fraud investigation, we must create a sociopathic profile that leads us to determine the type of pressure and to identify the potential warning signs as well. We need to understand the motivation behind the crime and the perpetration criminal behavior.
The recommendation is that All and Every institution or business must implement a strong internal control policy, a well implemented ethical behavior conduct program in addition to investigative techniques that help the institution to be prepared to catch those fraudsters who are working outside of the ethical conducts in order to enrich themselves and to deceive the institution and the public.
The Punishment has to be very strong with maximum penalties and fines as well as examples for new fraudsters to doubt before they want to get involve in a crime.
CFA, Master in Forensic Accounting, Master in International Business, Bachelor in Economics.