DECLASSIFIEDInsights |Risk Management
With the aim of raising awareness of and helping to tackle fraud and cyber crime in the not-for-profit and charity sectors, Charity Fraud Awareness Week 2021 runs from 18th to 22nd October.
Charity Fraud Awareness Week 2021 is a joint-initiative from the Fraud Advisory Panel (“the voice of the counter-fraud profession”) and the Charity Commission for England and Wales (“an independent, non-ministerial government department” that “registers and regulates charities”), who launched a related website – Preventing Charity Fraud – which provides resources “on how to prevent, detect and respond to fraud committed against charities and not-for-profits.”
We’ll be publishing content in support of the cause all week on our website and our social media accounts using the campaign’s hashtag: #StopCharityFraud. In tomorrow’s article, ESA Risk’s Cyber Risk & Security Consultant, Graeme McGowan, will be covering cyber fraud and other cyber risks in the charity sector. Later in the week, Ali Twidale, Banking & Financial Fraud Consultant will look at money laundering and financial crime in charities. And Serious Fraud and Economic Crime Consultant, Lloydette Bai-Marrow, will round off the week by discussing what charities should do if they suspect a fraud has been committed.
Fraud prevention and fraud investigations is a topic we publish on regularly. We expect that much of this existing content (while created for a wider audience) will be of use to those in the charity sector looking to fight fraud:
As the Preventing Charity Fraud website states, “charities can be susceptible to fraud.” And it’s easy to see why. In a 2019 survey of more than 3,000 registered charities, the Charity Commission and the Fraud Advisory Panel found that only 9% of charities “have a fraud awareness training programme”, “almost half don’t actually have any good-practice protections in place” and “26% of charities believe they’re vulnerable to fraud because of an over-reliance on goodwill and trust”.
There’s been an increase in the number of cases of fraud in all sectors since the start of the Covid-19 pandemic. It’s likely that the situation in the charity sector is no better than it was 2 years ago, which is why initiatives such as this one are needed.
Throughout this week, the Charity Commission and Fraud Advisory Panel are hosting a series of virtual events for those in the sector, including:
There will also be a Twitter chat hosted by the Global Cyber Alliance, from 16.00 on Thursday 21st October, “full of practical advice that charities, non-profits and donors can adopt to help protect data and systems from online fraud, cyber-attack and from monies being stolen.” The chat will use #GCAChat.
Outside of Charity Fraud Awareness Week, the Preventing Charity Fraud website contains a host of practical information for those working in or with not-for-profits and charities, including downloadable helpsheets on topics such as whistleblowing, financial crime risks, volunteer fundraising fraud and charity retail fraud.
Also on the website is the “8 principles of good counter-fraud practice” which was published in response to the findings of the 2019 survey of the sector.
The principles in full are:
“1. Fraud will always happen – being a charity is no defence. Even the best-prepared organisations cannot prevent all fraud. Charities are no less likely to be targeted than organisations in the private or public sector. Fraudsters don’t give a free pass to charitable activities.
“2. Fraud threats change constantly. Fraud evolves continually, and faster, thanks to digital technology. Charities need to be alert, agile and able to adapt their defences quickly and appropriately.
“3. Prevention is (far) better than cure. Financial loss and reputational damage can be reduced by effective prevention. It’s far more cost-effective to prevent fraud than to investigate it and remedy the damage done.
“4. Trust is exploited by fraudsters. Charities rely on trust and goodwill, which fraudsters try to exploit. A strong counter-fraud culture should be developed to encourage the robust use of fraud prevention controls and a willingness to challenge unusual activities and behaviour.
“5. Discovering fraud is a good thing. The first step in fighting fraud is to find it. This requires charities to talk openly and honestly about fraud. When charities don’t do this the only people who benefit are the fraudsters themselves.
“6. Report every individual fraud. The timely reporting of fraud to police, regulators and other agencies is fundamental to strengthening the resilience of individual charities and the sector as a whole.
“7. Anti-fraud responses should be proportionate to the charity’s size, activities and fraud risks. The vital first step in fighting fraud is to implement robust financial controls and get everyone in the charity to sign up to them.
“8. Fighting fraud is a job for everyone. Everybody involved – trustees, managers, employees, volunteers, beneficiaries – has a part to play in fighting fraud. Trustees in particular should manage fraud risks actively to satisfy themselves that the necessary counter-fraud arrangements are in place and working properly.”
Whatever sector you’re in, if you need advice or support on fraud prevention, we’re here to help. We’ll work with you to put in place preventative measures as part of your wider risk management strategy, covering areas including cyber security and due diligence.
If you suspect a fraud has been committed against your organisation, our experienced Investigations team – including a former principal investigative lawyer with the UK government’s Serious Fraud Office (SFO) – can help you discover the truth.
Contact Mike Wright, Risk Management & Investigations Consultant at email@example.com, +44 (0)843 515 8686 or via our contact form, to find out more.
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