Author: Nicola Sharp 4 October 2021
Nicola Sharp considers the pros and cons of such an approach.
The vast majority of fraud professionals would like to see reporting of fraud made compulsory.
In a survey conducted by the Fraud Advisory Panel and the UK Chapter of the Association of Certified Fraud Examiners (ACFE), 75% of the 200 professionals asked said they were in favour of introducing legislation to enforce the reporting of fraud. And 68% of them said fraud reporting should be compulsory in all situations, regardless of the financial impact.
Under current legislation, a company is under no legal obligation to report fraud to a law enforcement agency.
Fraud Advisory Panel chairman, David Clarke, said: “We need to raise our collective game very substantially to meet the enormous challenge that fraud poses, and this will require key changes, including the possibility of mandatory fraud reporting.’’
The survey found that many businesses are reluctant to disclose that they have been the victim of financial crime. While some said they were concerned that making such a disclosure may make them a target for criminals, others were worried about the response of regulators or insurance companies.
ACFE’s Tim Harvey said the survey indicated there is an “urgent need for a cohesive approach to tackling fraud’’, which would need to be well planned and resourced.
It remains the case, however, that there are possible pros and cons for companies when it comes to the potential introduction of mandatory fraud reporting. While it may help show that companies are taking fraud seriously and looking to tackle it, the fears about possible repercussions that were expressed in the survey are understandable.
But, with the cost of financial crime in the UK costing potentially billions of pounds each year, it is clear that a lot of fraud (and other crime) goes either undetected or unreported. Mandatory reporting would, at the very least, ensure the UK knew the true extent of the problem.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.