How to Make Fraudsters Pay for Your Companies’ Losses
The aftermath of a fraud incident can be very sloppy for a company to handle. Both small and large companies do suffer from losses. According to a report released by ACFE in 2018, while the smallest and largest organizations have equally significant median losses, small organizations are likely to be more significantly impacted by such loss compared to their larger counterparts due to less liquidity. A little financial disruption can cause disaster to operational cash flow.
Therefore, recovering losses as soon as fraud has been detected is also a crucial stage in handling the incident. Unfortunately, there is always a possibility that a victim company cannot fully recover the losses. The report also mentioned that 53% of victims could not cover losses at all, while 32% covered a portion of losses, and only 15% could cover all losses. The bigger the losses, the less likely the losses can be fully recovered.
However, there is always hope. If your companies are the victims, then you need to run an investigation to make a recovery plan. During the investigation, you need to find out the financial situation by asking relevant questions, such as how much loss your companies suffer from, how long the fraud had occurred, how much your companies should have gained profits if the fraud had not occurred, and whether the companies can survive the losses.
Once your companies find out the situation, there is a way to recover losses: taking the fraudsters’ assets. In embezzlement or theft cases, usually, the fraudsters turn the stolen money into goods assets, such as property, vehicles, securities, jewelry, bonds, and others.
However, taking the assets often becomes a daunting task for a company. Fraudsters usually funnel the assets through their family member, relatives, friends, or using an established/shell company to remove their traces and hide the assets.
While your companies actually can trace them by conducting asset tracing, it is risky and challenging as it requires time, energy, resources and special skills. Thus, it is not suggested that a company run the tracing by itself.
Once the assets are identified and located, they become opportunities for your companies to recover the losses. Other than purchasing goods assets, perpetrators also often use the stolen money for traveling and entertainment to support their lavish lifestyles. If the latter case happens, in general, there is no means for your companies to recover it.
Involving external experts such as forensic accountants, IT forensic specialists, and investigators from a trustworthy business investigation provider during the investigation and recovery processes is strongly recommended to obtain precise results as well as minimizing any emerging risk.
Integrity has been trusted by its clients as a business investigation provider – handling theft and embezzlement cases, asset tracing, skip tracing, and litigation support. To find out more details about our services, do not hesitate to contact us.