21st Century Financial Crimes in France

We don’t know who originally had the idea for committing financial crime, although what is said to be the first recorded incident of fraud – involving a Greek merchant called Hegestratos, an upfront payment for transporting a cargo of corn and a failed plan to scuttle the ship carrying it – dates back to around 300 BC.

Things have become a bit more sophisticated since then, not least because of new technology and the scope it offers for cyber-enabled fraud. Research published earlier this year by KPMG found that technology was a key enabler for almost a quarter of fraudsters and cyber-enabled fraud was ‘emerging as a growing threat’.

But whatever tools are used – from a multi-million dollar email scam to the old-fashioned technique of bouncing cheques – and whatever the fraudster’s motives for committing fraud may be, the threat to individuals and organisations is ever-present and the issue is rarely out of the headlines, in France or around the world.

Bribery and corruption

A quick Internet trawl produces a string of recent, high-profile, fraud-related stories. Back in May, a Cameroon citizen, Eric Donys Simeu, was extradited from France, where he had been in custody since September 2014, to the US to face allegations arising from a series of phishing campaigns in which airline tickets valued at more than €1.7 million were fraudulently issued.

In the UK, the Serious Fraud Office (SFO) announced on 8 August that it had opened a criminal investigation into global civil aviation giant Airbus Group – headquartered in Toulouse and with major production facilities elsewhere in France – ‘into allegations of fraud, bribery and corruption…[that] relate to irregularities concerning third party consultants’. Airbus says it ‘continues to cooperate with the SFO’.

Around the world, card not present fraud in Australia was reported to have shot up by 13% to AUS$226.3 million in 2015, Egypt is caught up in a wheat procurement scandal and the death was announced of Lou Pearlman. Famous as the man behind boy bands Backstreet Boys and NSYNC, he was also serving a 25-year jail sentence for a £300 million Ponzi fraud when he died.

The picture in France

Let’s go back to the France, and take a closer look at the fraud landscape there. Payment by card is the most popular payment method in France, with 84 million cards in circulation and 11.6 billion transactions annually, so card fraud is a major consideration.

And earlier this summer, there was good news from the l’Observatoire de la sécurité des cartes de paiement in its latest annual report, which found that the rate of card payment fraud fell slightly in 2015, down to 0.040 % from 0.043% the previous year.

Although the figures reduced for the second year running, so they are moving in the right direction, it is worth bearing in mind that the popularity of cards makes them a target for fraud and even these tiny percentages represent big figures: there were almost 3.7 million fraudulent transactions in 2015, although the average value was a modest €113.

There have also been recent worrying statistics about the level of banking scams in France. Data from the Ministere de L’Interieur’s Interstats service from October 2015, revealed that between 2010 and 2013, the number of households that fell victim to a banking scam – including fraudulent withdrawals – almost doubled, from 500,500 to 840,000.

Generally, victims did not know the fraud typology by which their confidential details, such as a credit card number, had been obtained but when they did, the most frequent method (16%) was via data capture when they were making a booking or buying on the Internet. Of the victims, seven out of ten suffered a single scam but 22% were affected by a series.

Fraud and business

Meanwhile, research suggests that business fraud is rapidly growing in France. A report released by PwC earlier this year found that 68% of French companies had been affected by fraud in the last two years, 13% higher than in 2014. In comparison, the average number of businesses affected globally was 36%.

Among the most frequent types of fraud were a cyber-enabled attack, with 53% of companies saying they had been affected this way in the last two years – almost double the rate in 2014, when it stood at 28%. That was reflected in the number of those who fear this type of attack over the next two years: 73% in France compared with 34% globally. However, more half did not have a response plan for cyber-enabled fraud or other types of cyberattack.

What about wider fraud in the business world? According to a 2015 EY fraud survey: ‘High-profile cases of financial misstatement and criminal investigations into accounting regularities do not appear to have resulted in any reduction in the risks of fraud…the risks of fraud, bribery and corruption are not going away’.

And it had a stark warning that in a highly competitive marketplace, ‘growth through corruption or fraud may seem the quickest option’.

However, there were some more positive findings from France in the report, which questioned employees in large companies in 38 countries in Europe, the Middle East, India and Africa: when it came to perceptions about whether bribery/corrupt practices happen widely in their country, 29% of French respondents thought that was the case, way below the 51% average for all countries.

And when asked whether they had heard of fraud or bribery in their business over the last 12 months, just 10% of French respondents said yes, compared with an all-country average of 21% and a high of 99% in Oman.

Combating fraud

If fraud has been around since 300BC, it’s a fair chance it will still be with us in 2300 or even 3300: it will just have evolved alongside the ways we live and work and the technology we use. But with some stark warnings about the cost of cyber-enabled fraud and other cybercrime alone – predicted to hit $2.1 trillion globally by 2019 – organisations cannot afford to leave fraud risks out of their strategic planning. Developing an anti-fraud culture, to protect against fraud happening in the first place, and fraud response plans, in the event that it does, are crucial.

We’ve recognised the importance of fraud risk management with the ICA Advanced Certificate in Managing Fraud, an intermediate level course aimed at current practitioners and those new to the field, which focuses on understanding fraud threats, preventing them from occurring and managing the response when they do. To find out more about this course, or our other qualifications focusing on financial crime prevention, risk and compliance and anti money laundering, why not register for one of our free information sessions, which we are holding in locations worldwide?

If you would like to find out more about ICA qualifications, we’re running a series of free information sessions at locations around the world in 2016, so why not book your place to find out how studying with the ICA could help enhance your career?

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