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LAST MONTH, WE LOOKED AT SOME OF THE GENERAL conclusions in the 41-page Kroll Global Fraud Report from Kroll Inc., the risk-consulting subsidiary of Marsh & McLennan Companies, Inc. Four conclusions from the 892 senior executives interviewed include: Corporate fraud is serious, widespread, and multifaceted; new business models driven by globalization are increasing exposure to corporate fraud; fraud is seen primarily as a financial and IT issue; and company size and location are meaningful factors.
This month we will examine the specific warnings in the report that apply to the financial services sector. The full report is available in six languages at www.kroll.com/fraud.
Vulnerabilities
Financial services is unique among the more than a dozen industries examined regarding a high risk from money laundering. The lowest threats listed for the sector are from theft of physical assets or stock and from vendor, supplier, or procurement fraud. The highest risks involve money laundering; regulatory compliance breaches; information theft, loss, or attack; and, finally, management conflicts of interest.
The medium risk vulnerabilities involve corruption or bribery, financial mismanagement, internal financial fraud or theft, and IP theft, piracy, or counterfeiting.
According to the report, "financial services emerged as the industry that tended to top the list of countermeasures adopted [including] screening, IT security, reputation monitoring, and adoption of risk officers."
Identity Theft
The report claims that more than 600,000 consumers are...