Staying informed on finance crime is very important in our interconnected and globalized world. No one wants to fall victim to financial fraud, so knowing the common types of crimes committed is important. Today we’re going to break down the basics of finance fraud and crime so you can be prepared and know what you’re looking for.
Kickbacks often seem quite innocuous to the average observer, but that is not the case. Generally, kickbacks can be defined as payments, or more accurately, bribes, that are paid to access a company’s goods. This results in a situation where individuals or companies are paying more to access certain goods or services.
As an illustration, imagine Company Y wants to buy a service from Company Z, but doesn’t have any contacts with Z. An employee from Z gives them an in-road with the company, and charges Company Y an upcharge that they define as a “finder’s fee”. Then, the employee from Z pockets the upcharge and reports the money to no one, or hides it in financial reports.
Internal theft is one of the most common forms of finance crime. You can define internal theft as any theft of materials from within the company by an employee. This is the most common culprit in shrinkage, except for in retail environments. However, even in retail environments, employee theft is still a problem.
The most notable among financial crimes is, far and away, embezzlement. This crime is also known as larceny. It involves someone who manages money for a company misusing those funds, including simply diverting company funds to their own accounts.
Interestingly, embezzlement doesn’t often make headlines. Companies tend to quietly deal with embezzlers rather than face the public about the security breach. Additionally, the less the public hears about embezzlement, the less they see large companies as vulnerable to crimes, especially from within.