International Fraud Handbook

The essential resource for fraud examiners around the globe

The International Fraud Handbook provides comprehensive guidance toward effective anti-fraud measures around the world. Written by the founder and chairman of the Association of Certified Fraud Examiners (ACFE), this book gives examiners a one-stop resource packed with authoritative information on cross-border fraud investigations, examination methodology, risk management, detection, prevention, response, and more, including new statistics from the ACFE 2018 Report to the Nations on Occupational Fraud and Abuse that reveal the prevalence and real-world impact of different types of fraud. Examples and detailed descriptions of the major types of fraud demonstrate the various manifestations examiners may encounter in organizations and show readers how to spot the “red flags” and develop a robust anti-fraud program.

In addition, this book includes jurisdiction-specific information on the anti-fraud environment for more than 35 countries around the globe. These country-focused discussions contributed by local anti-fraud experts provide readers with the information they need when conducting cross-border engagements, including applicable legal and regulatory requirements, the types and sources of information available when investigating fraud, foundational anti-fraud frameworks, cultural considerations, and more.

The rising global economy brings both tremendous opportunity and risks that are becoming increasingly difficult to manage. As a result, many jurisdictions are attempting to strengthen their anti-fraud environments — whether through stricter anti-bribery laws or more stringent risk management guidelines — but a lack of uniformity in legal rules and guidance can be challenging for organizations doing business abroad. This book helps examiners mitigate fraud in their own organizations, while taking the necessary steps to prevent potential legal exposure.

• Understand the different types of fraud, their common elements, and their impacts across an organization
• Conduct a thorough risk assessment and implement effective response and control activities
• Learn the ACFE’s standard investigation methodology for domestic and cross-border fraud investigations
• Explore fraud trends and region-specific information for countries on every continent

As levels of risk increase and the risks themselves become more complex, the International Fraud Handbook gives examiners a robust resource for more effective prevention and detection.

Preface ix

Acknowledgments xi

About the ACFE xvii

PART I 1

1 INTRODUCTION 3

2 LEGAL ISSUES PERTAINING TO FRAUD 43

3 FRAUD RISK ASSESSMENT 75

4 PREVENTING AND DETECTING FRAUD 101

5 FRAUD INVESTIGATION 141

6 INTERVIEWING WITNESSES AND SUSPECTS 179

PART II 209

7 ASIA-PACIFIC REGION 211

Australia 213

China 218

Japan 221

Malaysia 225

New Zealand 227

Philippines 231

Singapore 234

South Korea 237

Taiwan 241

8 CANADA 245

9 EASTERN EUROPE AND WESTERN/CENTRAL ASIA 251

Bulgaria 253

Czech Republic 256

Poland 259

Slovenia 262

10 LATIN AMERICA AND THE CARIBBEAN 265

Brazil 267

Chile 270

Mexico 277

Peru 281

11 MIDDLE EAST AND NORTH AFRICA 287

Cyprus 289

Egypt 292

Jordan 294

Oman 296

United Arab Emirates 298

12 SOUTHERN ASIA 303

India 305

Pakistan 309

13 SUB-SAHARAN AFRICA 315

Kenya 317

Mauritius 320

South Africa 323

14 UNITED STATES 329

15 WESTERN EUROPE 337

Denmark 339

France 342

Germany 349

Greece 352

Netherlands 354

Norway 357

Spain 361

Switzerland 365

United Kingdom 368

Index 373

DR. JOSEPH T. WELLS, CFE, CPA, is the founder and Chairman of the Association of Certified Fraud Examiners (ACFE). His landmark research in fraud detection and deterrence has earned him induction into the American Institute of Certified Public Accountants' Business and Industry Hall of Fame, and he has been named to Accounting Today's list of the Top 100 Most Influential People nine times.

Technology has made the world smaller for businesses, but it has broadened the playing field for those who commit fraud. As business operations grow more complex and sophisticated, so do the mechanisms used to defraud and disguise, locking businesses and fraudsters into an arms race that consumes increasingly more time and resources.

Author Dr. Joseph T. Wells has spent more than forty years researching, investigating, and combatting fraud. He has seen the technology evolve and the stakes grow ever larger, and through it all, three central lessons remain:

• Fraud will always exist as long as people are in positions of trust.
• There are only so many types of fraud, and many share similar traits.
• Ignoring fraud will never make it go away—it will only grow.

The International Fraud Handbook expands upon these universal truths to provide a one-stop resource for combatting fraud in the modern business environment. Part I is designed to help examiners understand and recognize fraud—who commits it, what it looks like, where it occurs, and the motivations behind it—and delves into effective risk assessment, prevention, detection, and investigation techniques. As companies risk legal exposure for a lack of strong controls, the discussion also explores the relevant legal issues that must be considered for any anti-fraud strategy.

Part II provides implementation guidance for organizations with cross-border operations, including jurisdiction-specific information on the anti-fraud environment for more than 35 countries around the world. Submissions from local experts provide real-world perspective and advice on general trends, information sources, and differing regulatory frameworks, plus insight on navigating regional culture and relevant laws.

The world is awakening to both the risk and opportunity of a globalized economy. Strict anti-bribery laws and more stringent risk management guidelines are a step in the right direction, but nations have yet to achieve any kind of global uniformity in regulation, implementation, and enforcement. The International Fraud Handbook clears a path through the tangled international regulatory maze, equipping examiners with the information they need to design and implement a robust anti-fraud program.

THE MUST-HAVE GUIDE TO FRAUD AND EFFECTIVE COUNTER-STRATEGIES AROUND THE WORLD

The rise of the global economy brings both opportunity and risk, and the risks are becoming increasingly difficult to manage. Fraud exists everywhere, and as technology grows more sophisticated, so do the crimes. Business operations routinely reach across borders, and though countries around the world are implementing stricter anti-fraud measures, little uniformity exists.

The International Fraud Handbook offers comprehensive guidance for developing a robust anti-fraud program anywhere in the world. Opening with a primer on the types of fraud and their impact and prevalence, this book provides expert insight on risk assessment, incident response, and control measures, including the standard investigation methodology used by the Association of Certified Fraud Examiners. Information gathered from actual fraud examiners in the field provides nation-specific details on the foundational anti-fraud frameworks, cultural considerations, regulatory requirements, investigation considerations, and other critical factors cross-border engagements entail, helping examiners navigate the uneven complexities of transnational activities.

Providing a clear handbook for both domestic and international anti-fraud strategy, this book is an invaluable resource for examiners, auditors, controllers, or anyone tasked with protecting their organization against fraud.