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Murthy, Nilaya; Gopalkrishnan, Santosh
2023 Journal of Financial Crime
The banking sector requires a major comeback with the series of bank frauds that has shook the nation. The rising non-performing assets (NPAs) and corporate frauds find their roots in the top-level management or executive levels. The purpose of this study to analyse the behavioural component with corporate governance lapses for creating a trail and to what extent it can contribute to forensic analysis to help reduce and prevent fraud in the future.Design/methodology/approachThis study is investigative in nature. This study uses case study approach by taking into account the major Advance–NPA–Fraud cases over period of 2010–2022. RBI data for bank advances, NPAs and advances-relate frauds from 2005 to 2019 were studies and interpreted for creating a trend and pattern for the reduction and prevention of frauds.FindingsThe authors found that behavioural factors and personalities affect the systems and culture of the company, thereby giving a jolt to the corporate governance mechanisms along with various entities like depositors, consumers and shareholders.Practical implicationsAssessing the behavioural aspects for risk mitigation remains unexplored in the banking sector. The personality dimension can help in contributing to comprehending the mental aspects and the reasons behind the combination of dark triads with economic offences.Originality/valueThis study is beneficial to all the beneficiaries of the banking sector and the economy at large in understanding the implications of risks because of patterns formed by emotions and vulnerability towards economic and fugitive economic crimes.
2023 Journal of Financial Crime
This paper advances the argument that misappropriation of public funds should be construed as illicit financial flows (IFFs) which, undoubtedly, have an adverse effect on the realisation of the right to development. Furthermore, by detailing the nature of IFFs, this paper aims to demystify the shallow understanding of what is IFF or what are IFFs and why misappropriation of public funds should be seen in that light.Design/methodology/approachThis paper examines and interrogates the different judgements that have been delivered in cases tried and finalised by the special criminal court (SCC). With viewpoints that are backed by a theoretical understanding of Cameroonian criminal law in particular and criminal law in general, an analysis of the underlying intentions, motives and trajectories in the commission of misappropriation of public funds corroborate the view that the offence must be construed as IFFs. The data used in this paper are primary.FindingsA few pertinent findings were made in the course of this research. Firstly, the offence of misappropriation of public funds and IFFs are not distinct, and any effort to limit the use of “funds” to finances will ultimately miss the point as property with financial value will definitely amount to funds. Secondly, through misappropriation of public funds/property, IFFs have been committed based on the trends and figures disclosed in the judgements of the SCC. Finally, the right to development requires resources and by stealing public funds, resources are deprived, thereby compromising the realisation of development and the right to development.Originality/valueThis paper examines the impact of IFFs on the right to development within the context of Cameroon. By diagnosing the definition of the crime of misappropriation of public property or funds, the paper argues that such an offence must be seen as IFFs given its nature, the motive and intention underlying its perpetration. By taking such perspectives, this paper not only adds to the literature thereon but further brings in new perspectives on those aspects of Cameroonian criminal law.
Krambia Kapardis, Maria; Levi, Michael
2023 Journal of Financial Crime
The purpose of this paper is to identify if fraud theory models suggested over the years are applicable to match-fixing and if so, whether the Krambia-Kapardis’ (2016) holistic fraud and corruption prevention model can be used to reduce significantly match-fixing in football.Design/methodology/approachAn online survey was developed by the authors and was administered to football stakeholders in Cyprus, namely, players, referees, coaches and team management.FindingsThe research questions, who are the initiators of match-fixing, why is match-fixing taking place and what is the best way to prevent or reduce match-fixing, have been answered, and these findings have enabled the authors to make policy recommendations.Research limitations/implicationsThe survey considered match-fixing in only one sport (football) while the number of respondent categories and the 335 usable questionnaires returned did not allow advanced statistical analysis of the data obtained.Practical implicationsThe findings point to the need both for ethics and moral values to be installed in all the stakeholders through training and continuing education. It is also suggested that teams/clubs and related associations acting as regulators ought to implement governance principles and ethical programs, including whistleblowing lines and appoint integrity officers to minimize the match-fixing phenomenon. Furthermore, society, as well as government, sport regulators and sponsors, ought to encourage and demand fair play and integrity in sport through improved measures of governance and accountability and the implementation of ethical audits and public disclosure of audited financial statements of teams. Finally, sports integrity ought to be embedded in school curriculum from a very young age.Originality/valueTo the best of the authors’ knowledge, this is an original contribution to knowledge that has impact on the future of sporting fairness and social legitimacy.
Duho, King Carl Tornam; Agyenim-Boateng, Cletus; Asare, Emmanuel Tetteh; Onumah, Joseph Mensah
2023 Journal of Financial Crime
The purpose of this study is to examine the convergence and determinants of anti-corruption disclosures of extractive firms in Africa.Design/methodology/approachThe study uses an unbalanced panel data of 27 firms operating in 5 African countries covering the period 2006 to 2018. Corporate data is collected from the global reporting initiative (GRI) database. The study uses an index to measure overall disclosure and individual items are coded as binary. The study uses fixed effects, panel logistic and panel-corrected standard error regression, depending on the type of dependent variable used.FindingsThe results indicate that the determinants of anti-corruption disclosure are membership in the United Nations global compact (UNGC) and Extractive Industry Transparency Initiative, multi-national enterprise status, corruption perception index and human development index (HDI). Specifically, UNGC membership and multi-national status enhance the disclosure on corruption analysis. Countries with a high prevalence of corruption tend to disclose more on corruption analysis. Disclosure on corruption training is high among firms that are UNGC signatories, countries with a high HDI and countries with a high prevalence of corruption. There is a weak effect of firm-level, industry-level and country-level factors on disclosures on corruption response.Research limitations/implicationsThe study provides insights on the use of GRI 205: Anti-Corruption, which has relevant implications for practitioners, policymakers and the academic community.Originality/valueThis study is premier in exploring anti-corruption disclosure with a special focus on extractive firms in Africa. It is also unique in providing a test of both beta and sigma convergence among the firms.
Radu, Camélia; Segalin Zanella, Aline
2023 Journal of Financial Crime
Recent studies have concluded that auditors underreport existing internal control over financial reporting (ICFR) weaknesses. This study aims to assess how effective external auditors are, as independent third parties, at disclosing reliable opinions to the public on the ICFR.Design/methodology/approachUsing a logistic regression, the authors analyzed a sample of 106 US companies classified as large accelerated filers or accelerated filers consisting in 53 companies which restated their financial statements and a control group of 53 companies having “clean financial statements” at any given moment during the research period, between 2005 and 2018.FindingsThe results indicate that only 34% of companies with financial statements deemed unreliable have received an adverse ICFR opinion issued by the external auditor during the misrepresentation period or its prior year. The authors also notice that external auditors are somewhat effective in identifying and disclosing red flags to the public that certain companies have internal control (IC) material weaknesses. The results also indicate that the average presence of an adverse IC opinion issued by the external auditor during the misrepresentation period or its prior year for companies with unreliable financial statements is higher than for companies with financial statements deemed reliable.Practical implicationsThis study tests if an increase in efforts and disbursements with audit fees are justifiable by external auditors’ issuing effective, reliable opinions and reinforcing a more transparent and ethical capital markets environment, that is, an environment where accurate information is available for stakeholders. If external auditors are negligent in providing a qualitative and independent opinion to stakeholders, the increase of disbursements made with audit fees is less justifiable. Thus, the research has practical implication for auditors as well as standard setters.Originality/valueThis study extends the literature on ICFR by empirically testing whether the public can rely on external auditors’ opinions expressed on Sarbanes–Oxley Section 404 reports.
Parker, Megan Jean; Dodge, Mary
2023 Journal of Financial Crime
Deferred prosecution agreements (DPAs) are the tool of choice for federal prosecutors when adjudicating corporate misconduct. A DPA is a negotiation that permits the allegedly guilty party from undergoing a criminal trial if they avoid committing further wrongdoing for a specified period. This paper aims to examine whether DPAs are a beneficial mechanism for the criminal justice system to use while adjudicating corporate misconduct. By conducting in-depth semi-structured qualitative interviews with 24 practitioners in the legal field and white-collar crime experts, this study identifies the shortcomings and advantages of DPAs and highlights what policy enactments might enhance their application. The study contributes to the existing literature by expanding the narratives used by judicial officials, legal practitioners and white-collar crime scholars on the role of DPAs.Design/methodology/approachThe current study is an in-depth qualitative analysis that explores judicial actors’ and white-collar crime scholars’ opinions on the adoption of DPAs to adjudicate corporate misconduct. The literature on DPAs is currently derived primarily from law and literature reviews published by legal scholars. Clandestine negotiations are not accessible to the public and are frequently kept in sealed files unless a breach of contract occurs, resulting in the case proceeding to trial. Hence, a qualitative analysis is the best approach to evaluate the effectiveness of DPAs. Further, little evidence is available that focuses on the opinions of professionals who have participated in these agreements. The interviews were conducted over Zoom and lasted an average of 43 min, with the longest interview spanning 1 h and 45 min and the shortest interview being 14 minutes. A non-probability sampling method – specifically, snowball sampling – was used to generate a total sample of 24 legal professionals and white-collar crime scholars. Initial participants were found by contacting law offices specializing in white-collar crime litigation and using current networks to attain access to a broader range of participants. Then, 19 participants provided referrals throughout the study. The final sample consisted of nine government officials, eight legal practitioners and seven white-collar crime academics experts. One of the government official interviews was excluded from the final research project due to a lack of expertise in the field of white-collar crime. The interview questions were designed to promote in-depth conversation and insight into personal opinions on the adoption of DPAs. Several inquiries highlighted whether DPAs are an appropriate response to corporate misconduct and whether they reduced recidivism through their intended deterrent effect. Furthermore, several descriptive questions sought to understand which criminal justice actors support the adoption of DPAs in white-collar crime cases and why. Coding of the data was first conducted individually by each author. The researchers then compared thematic findings that reflected consensus.FindingsAn immediate theme identifiable in the research is the intrinsic value that DPAs offer in adjudicating corporate wrongdoing. As indicated by a participant, corporate misconduct is not “black or white,” stressing the importance of prosecutors having a middle ground between criminal prosecution and the dismissal of charges. A judicial official indicated that “DPAs are another essential arrow in a prosecutor’s quiver – and something a defense attorney can bargain for” (Respondent 5). Seven government officials and legal practitioners noted that you are unable to send a corporation to jail, and you do not simply want to put them out of business; thus, a DPA is the only tool in which the government can mandate structural change in a company without dismantling the entire entity. Only three academics concurred with the government officials and legal practitioners that DPAs are beneficial and offer prosecutors a vital middle ground. One academic, for example, stated that “DPAs have given U.S Attorney offices that ability to be involved for a considerable amount of time in a company's business, while simultaneously promoting change within the entity” (Respondent 14). Additionally, DPAs ensure that corporations are held criminally liable without triggering an endless cycle of collateral consequences for innocent third parties. One legal practitioner, for example, stated: “Just look at the Enron case; they charged Arthur Andersen with obstruction of justice and dismantled the entire entity they made it where the business was never going to come back. A small subset of individuals, in this case, should have been held responsible but instead, hundreds and if not thousands of people were harmed. With this in mind, DPAs are extremely important, in that it limits collateral consequences because DPAs take a more holistic view that criminal prosecution does not consider” (Respondent 21). Another respondent highlighted that “DPAs are the only tool available that can be employed to change an entire organization structurally” (Respondent 20). Ultimately, the findings suggest that there is a consensus among respondents that DPAs are an appropriate response to corporate misconduct, particularly when the agreement stipulates that a company must hire an external compliance monitor and update their current compliance system. Overall, participants emphasized that these stipulations promote a sense of corporate accountability, provide for the dismissal of guilty employees and mandate structural change. The majority of the respondents (n = 20) insisted that DPAs are advantageous, yet a subset of participants were skeptical of their use in white-collar crime prosecutions. One legal practitioner, for example, noted that “DPAs are political creatures that are awarded as political favors to the largest of corporations that our economy relies upon” (Respondent 17). Another government official confirmed this statement, indicating that “DPAs are a mere slap on the wrist for large corporations – they simply see it as doing business” (Respondent 6). Four academic participants emphasized that DPAs are typically negotiated with multi-level corporations and are not extended to the small businesses that suffer the dire consequences of criminal prosecution. One academic, for instance, stressed that “the question becomes is it fairly applied and being implemented properly. Larger companies are more likely to receive and benefit from a DPA, thus, raising the question of fairness” (Respondent 12). Another academic who was previously a government official stated: “DPAs risk abuse – there have been several instances where prosecutors have forced companies to donate money to favored charities and overstepped their powers. Sometimes DPAs also come with monitors. For example, banks typically have to pay for the auditor, and it becomes extremely intrusive, and it it not clear that they are efficient.”Research limitations/implicationsSeveral limitations exist in this research. First, it is not a comprehensive study that is representative of the larger population, which limits generalizability. Given the contention of research on DPAs, this qualitative research contributes to the literature, and its findings are likely transferable to multiple settings in which DPAs are used. Second, DPAs are processed and drafted differently across jurisdictions; thus, comparing DPAs across state levels and among departments in the federal government would be equivalent to comparing apples to oranges. This comparison is yet another limitation to the study because criminal justice practitioners operate in both the state and federal jurisdictions. Another challenge in the current study and something that likely will be a problem for future researchers is the difficulty of gaining access to experts in an exclusive field of criminal justice, such as federal prosecutors, Department of Justice officials, federal judges and elite corporate defense attorneys. Ultimately, several obstacles arose during the study, particularly when recruiting participants to gain a large enough sample size to conduct meaningful analysis. This resulted in smaller sample size but rich, in-depth data that achieved saturation among participants.Practical implicationsSeveral policy implications are identifiable. First, it appears that DPAs are a mainstay of white-collar crime prosecution. No participants advocate for their complete removal from the prosecution process. Participants highlight that DPAs occupy an essential middle-ground between dismissal and criminal charges. Without this mechanism, prosecution would be impeded, and holding corporate criminal actors liable would increasingly become formidable. Although it appears that the system cannot function without DPAs, several respondents emphasize that we must begin to hold individuals accountable alongside corporations. Another policy implication that a minority of participants mentioned within the study involves ensuring that our compliance monitoring system operates appropriately. A majority of participants note that the overarching stipulation that promotes structural change within an organization is adopting a functioning compliance monitoring system, thus, emphasizing the importance of this process operating smoothly and ethically. The selection of an independent compliance monitor may be problematic. For example, a former government compliance monitor notes that not all monitors are experts in the field they are overseeing. A pharmaceutical expert, for example, may be attempting to regulate an automotive organization, which may present unique challenges. An agency of federal professionals dedicated to supervising specific industries such as automotive, pharmaceutical and financial would ensure that organizations are actually implementing the terms of the DPA.Originality/valueUltimately, the current research highlights the necessity of empirically studying the benefits and drawbacks of such agreements. Future research on the topic remains onerous due to the scarcity of a centralized database that contains extensive details of DPAs. The present study suggests that the verdict on DPAs is undecided, with more than half of the study's criminal justice professionals advocating for their continued and even increased use. However, about half of the participants, particularly academics, called attention to the agreements’ potential bias. The disagreement among participants is most contentious in the consideration of a DPA centralized database which would immensely aid future research and policy advancements.
Bani-Mustafa, Ahmed; Al Qudah, Anas; Damrah, Sadeq; Alameen, Mamoon
2023 Journal of Financial Crime
This paper aims to investigate whether culture has an impact on justifications for tax cheating, and if there is, indeed, a rationale for justifying this behavior.Design/methodology/approachWorld surveys (V201) were used to measure justifications for tax cheating in 39 countries. Hofstede’s culture dimensions were used as a measurement scale for the relevant cultural aspects that could have an impact on tax cheating.FindingsThe results show that individualism and power distance increase the justification, while masculinity and uncertainty avoidance decrease the justification for tax cheating. Accordingly, when budgeting for tax revenues, governments need to consider the cultural dimension in their risk assessments for tax evasion.Originality/valueThe findings of this research provide some implications for legislators and policymakers. For example, they need to give more consideration to their respective society’s cultural dimensions and to the structure of their communities when they are imposing taxes. Legislators need to put more effort toward convincing people why it is necessary to impose and/or increase certain taxes, how society benefits directly and indirectly and why action needs to be taken when these taxes are not paid.
Sahla, Widya Ais; Ardianto, Ardianto
2023 Journal of Financial Crime
This study aims to examine the fraud tendency on the perception of external auditors triggered by five components of the fraud pentagon: pressure (P), opportunity (O), rationalization (R), competence (C) and arrogance (A). In addition, ethical values (EV) are placed as a moderating variable for this relationship.Design/methodology/approachThis is a quantitative study with a survey to external auditors around Indonesia. A moderation model for a research framework was developed to investigate the moderating role of ethical values.FindingsThe findings have shown that the five components of the fraud pentagon theory are not fully proven as triggers of fraud in the perception of external auditors. Only C and A have a significant value in influencing the perception of fraud tendency (PFT). Other findings also provide evidence that EV moderate the relationship between C and A to PFT. This shows that EV can be used as an anti-fraud strategy in the external auditor environment.Originality/valueThe originality of this paper is one of the first study that examines the fraud pentagon theory in the field of behavioral accounting. In addition, this paper contributes to the integration of ethical values as an anti-fraud strategy in the external auditor environment.
2023 Journal of Financial Crime
The purpose of this paper is to establish the theory of the fraud star and the formulation of its microeconomic model, based on the behavioural sciences.Design/methodology/approachThe methodology is a practical exploration, first in the convergence of the economics of fraud and the behavioural sciences, based on these tools, formulating the new theory of the star of fraud and formulating its microeconomic model.FindingsThe paper concludes with a new model of the fraud star theory and its microeconomic modelling. Take into account the new theory of the fraud star of this article.Research limitations/implicationsThere are no limitations in the model.Practical implicationsThe practical implications are to apply the new fraud star theory and calculate your income, in different scenarios.Social implicationsThe social implication is to know the income for the crime of fraud, according to the level of regulations, control and effective punishment.Originality/valueThe present work is original; there is no new theory of the fraud star, nor its microeconomic model, and it does not exist in the academic field, only in this work.
Teichmann, Fabian Maximilian Johannes; Wittmann, Chiara
2023 Journal of Financial Crime
The European Union’s Whistleblower Directive (WBD), or formally the “Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons reporting infringements of Union law” seeks to establish a uniform standard for whistleblowing protection across member state jurisdictions. Considering the international reach of the directive, it inevitably confronts divergent national attitudes towards whistleblowing. This paper aims to examine various cultural attitudes which have contributed to the common understanding of whistleblowing, under the directive.Design/methodology/approachThe rhetoric on whistleblowing from a combination of business and national cultures is examined herein. A focus is cast on the information technology sector, which has traditionally protected trade secrecy over whistleblowing, under the guise of protecting of innovation. Moreover, the juxtaposition of American and German employment culture is testimony to the discrepancy in national narratives.FindingsThe WBD is both a symptom and a yardstick of modern employment culture in Europe. There are crucial clashes with trade secrecy which the directive has not resolved as well as an acknowledgement of the paradigm of legal thought which the directive pushes.Originality/valueBy reference to both business and national culture, this paper highlights the heterogenous conception of whistleblowing which the directive aims to reconcile. Whilst a vast amount of literature has covered isolated criticism of the WBD, a wider lens has not been cast to consider the pervasive influence of specific aspects on business culture.
Dearden, Thomas E.; Scaptura, Maria
2023 Journal of Financial Crime
The purpose of this study is to examine whether victims of financial crimes are also affected by anomie. Fraud from supposed financial advisors leaves many victims feeling uncertain of their financial future and betrayed by people they trusted. This is felt even more when victims are betrayed by people in their own community. Previous research (see Hövermann et al. 2015a, 2015b, 2016, 2018) has found that individuals susceptible to the capitalistic values of the USA and other Western nations are more likely to cheat (Muftic, 2006), engage in rule-breaking (Zito, 2018) and believe in egoistic individuality (Hövermann et al. 2015a). This belief in these values could also increase the chance of victimization.Design/methodology/approachThe authors used an experimental survey to assess whether institutional anomie theory (IAT) can also affect victimization at the individual level.FindingsThe authors find support for Messner and Rosenfeld’s (2001) IAT. An interaction was present, which revealed that IAT is more predictive when individuals are high in financial need. When individuals are desperate, they will find whatever means possible to meet the expectations of the American Dream, even if it involves investing their life savings with a potential fraudster.Originality/valueThis paper examines IAT as it relates to victim behavior. Further, this paper links the techniques of offenders using shared social status (i.e. affinity) with criminological theory.
2023 Journal of Financial Crime
This paper aims to review the empirical literature dealing with the association between family firms and tax avoidance.Design/methodology/approachEmpirical papers are collected based on electronic searches in several editorial sources (e.g. Elsevier, Emerald, Meridian Allenpress, Springer, Sage, Taylor and Francis and Wiley-Blackwell) in family-related, accounting and finance journals. Key words used to identify relevant studies are “family firms” or “family ownership” combined with “tax avoidance”, “tax aggressiveness”, “tax evasion” and “tax heaven”. This search yields 21 published papers over the period of 2010–2022.FindingsThe summary of empirical studies examining the relationship between family firms and tax avoidance suggests that the majority of them have been conducted in Germany, USA and Taiwan and other European civil law countries. The association between family firms and tax avoidance is negative in USA, Finland and Belgium. By contrast, the relationship between family firms and tax avoidance is positive and significant in other developed (Germany and Italy) and developing economies (Brazil, India, Malaysia and Tunisia). In Taiwan, the impact of family firms on tax avoidance depends on corporate opacity that mitigates the negative impact of family firms on tax avoidance.Practical implicationsWith respect to regulators, this review informs fiscal authorities that family firms are associated with high levels of tax aggressiveness in some settings (e.g. Brazil, Germany, Italy and Tunisia). Accordingly, they should be aware about this tax management behavior in family firms to avoid its adverse effect on tax revenues. With respect to auditors, this study alerts them about the necessity to consider fiscal audit risk linked to family firms when planning their audit missions especially in countries characterized by high level of corporate opacity.Originality/valueThis literature review represents a first historical record and an introduction for accounting scholars who aim to investigate the topics linked to tax aggressiveness in the family firms’ context. It also highlights some limits related to this stream of research and offers future research perspectives.
Leuprecht, Christian; Jenkins, Caitlyn; Hamilton, Rhianna
2023 Journal of Financial Crime
This study aims to explain how cryptocurrency is leveraged for illicit purposes across the global financial system. Specifically, it establishes how cryptocurrency has been changing the nature of transnational and domestic money laundering (ML). It then assesses the effectiveness of conventional anti-money laundering (AML) policy and legislation against the proliferation of crypto laundering, using Canada as a critical case study.Design/methodology/approachData was collected from court cases and secondary sources to build cross-case trends of cryptocurrency use in ML. Illicit International Political Economy forms the theoretical foundation for this study, whose contribution is situated in the current literature on crypto-ML.FindingsThis study finds that Bitcoin is common among crypto-money launderers, though most also use some form of alt-coin, and that the use of third-party currency exchanges is a prevalent method to create illicit funds and conceal proceeds of crime. The findings validate two hypotheses that illicit use of crypto is prevalent in the first two stages of ML, and that crypto is most often used in conjunction with other fiat currencies. Although law enforcement is improving on monitoring and understanding popular cryptocurrencies such as Bitcoin, alt-coins pose a significant challenge for criminal intelligence. New regulations for third-party currency exchanges are having a positive impact on curtailing crypto-laundering but are shown to be insufficient per se to contain the use of crypto in criminal activity.Originality/valueThis study contributes to a more robust understanding of the use of virtual currency in transnational and domestic ML. It contributes to an emerging body of literature on the role of technological change in enabling the global flow of illicit funds. It also informs public policy on virtual currency in general, and on AML regulation in Canada in particular.
2023 Journal of Financial Crime
Familiar identity theft, which occurs when an individual known to a victim steals his/her identity, is a common problem in the USA. The purpose of this study was to understand familiar identity theft victims’ reporting behaviors using Black's (1976) theory of law as a conceptual framework.Design/methodology/approachData were obtained from the 2012, 2014, 2016 and 2018 administrations of the National Crime Victimization Survey – Identity Theft Supplement. A series of cross-tabulations were conducted to examine the relationship between reporting behaviors and age, minority, gender, income, marital status and education. Fisher’s exact test was used to interpret the findings.FindingsKey findings include older familiar identity theft victims who personally lost greater sums of money because of identity theft victimization were more likely to report to law enforcement than younger familiar identity theft victims who personally lost less money. Married familiar identity theft victims were less likely to report to law enforcement than those who were not married.Originality/valueThis study extends the work of Golladay (2017) to explore the reporting behaviors of a population of identity theft victims that have been largely overlooked in empirical literature.
de Rancourt-Raymond, Audrey; Smaili, Nadia
2023 Journal of Financial Crime
The purpose of this study is to discuss the harmful use of deepfakes in an organizational context, based on the only two cases the authors found that were addressed by the media from the perspective of corporate fraud. This study offers an overview of deepfake technology, and in particular, examines five W questions to better decipher the impact of these tools on organizations: What is deepfake? Who is the fraudster and who is targeted? Why use them and how? And What after? Based on these five W questions, this study provides an in-depth discussion of the two cases identified. Even though this technology has several advantages, this study examines its dark side.Design/methodology/approachUsing comparative analysis, the authors study the only two known and publicized fraud cases by using deepfakes that have targeted chief executive officers to date.FindingsThe paper provides an extensive picture of the unethical and illicit use of deepfakes in an organizational context and discusses how this technology could affect fraud risk. In addition, the analysis of cases shows that voice-generating software, combined with other fraud schemes such as business email compromise, facilitates the commission of the fraud, as the victims feel confident because they recognize the speaker’s voice and emails. The analysis shows that any organization could be vulnerable to this technology. The median costs of this type of fraud can be high. For the two cases identified, the estimated losses amounted to US$243,000 and US$35,000,000, respectively.Originality/valueThis paper adds new insights to the scarce research on deepfakes and financial crime by investigating the causes and consequences of the unethical and illicit use of deepfakes. It has several implications for organizations, boards of directors, management and regulatory authorities.
McIntyre, Jacqui-Lyn; Aslett, Duane; Buitendag, Nico
2023 Journal of Financial Crime
President Cyril Ramaphosa, in his 2018 State of the Nation Address, stated that “Thieves who are stealing public funds should be arrested and prosecuted”, and called for lifestyle audits of public-sector employees. The gross misuse of COVID-19 relief funds by public officials indicated the urgent need to execute these audits as an anti-corruption measure. This paper aims to provide a review of the existing state of affairs with regard to the application of lifestyle audits in South Africa.Design/methodology/approachThis paper critically analyses the literature available on the current position of South Africa concerning lifestyle audits in the public sector, based on the mandates of some of the anti-corruption agencies that could be responsible for the conducting and processing of such audits.FindingsSouth Africa has only recently seen a framework for applying lifestyle audits, developed by the Department of Public Service and Administration. Although these first steps in developing a standard practice are laudable, the practical process of dealing with misconduct and/or criminal matters remains to be seen. It is recommended that South Africa consider a legislative approach to dealing with unlawfully obtained wealth by either criminalising the act of illicit enrichment (per the United Nations Convention Against Corruption) or creating an Unexplained Wealth Order, as seen, for example, in the UK.Originality/valueSouth Africa is in dire need of addressing corruption in the public sector. Despite lifestyle audits being called for, the lack of proper implementation is negating any positive outcomes. Therefore, alternative solutions should be investigated.
2023 Journal of Financial Crime
The purpose of this paper is to provide a retrospective analysis of the Russian criminal legislation in the field of protection of economic relations in the transitional period of the economy.Design/methodology/approachBased on historical, as well as general scientific research, methods (induction, deduction, analysis, synthesis and historical) and private scientific methods for studying criminal law phenomena (formal-logical, statistical and document research method), the author managed to identify a number of patterns in the development of the Russian criminal legislation in the context of the chosen economic model.FindingsIn particular, it is noted that during the period of the destruction of the planned economic model and the choice of ways for the development of the economy, as well as at the initial stage of the transition period of the economy in Russia.Originality/valueThe author singles out the following patterns of development of criminal legislation in Russia: a) under the influence of a sharp change in the economic model, risks in the sphere of protection of economic relations; and b) the tasks of criminal law in the field of protection of economic relations are changing significantly: from protecting the state monopoly in most areas of economic activity to protecting market economic relations.