Risk

Next Generation Forensic will change the way we combat financial crime

As the top Fraud examiners gather for the the ACFE Africa Fraud Conference this year, the focus on forensics is in the spotlight.

It goes without saying that technology rules our working and personal environments. Electronic access to data, communications, financial services, research, commerce and the like is increasing exponentially. With the enhanced connectivity come some obvious risks, many of which we are well aware. These risks poses a serious threat in terms of increased levels of fraud, corruption and cybercrime. Frankly the traditional Forensic approaches to investigation, prevention and detection of criminal activities are being outpaced by the speed at which new avenues of criminal perpetration are developing. Simply put the manner in which financial crime has been addressed traditionally will not suffice. There is an urgent need for critical reform of Forensic Services without which effective mitigation of financial crime will be severely hampered. The traditional theft of funds is now augmented with theft of Intellectual Property and personal information as we see in media reports on a regular basis. Fraud and misrepresentation for financial gain has now been supercharged with social engineering exploits. Hard currency has been augmented by digital currency. Face to face fraud perpetration has been augmented by cyber related exploits from around the globe. No need to travel, just logon. The message is fairly self-evident.

Traditional investigations will still have an important role as part of any remediation effort however the need to supersize the skills set of Forensic practitioners is inevitable. The question is not “if” or “when” cybercrime will comprise a significant portion of financial crime losses. Cybercrime is here and it’s not going to abate for us to catch up, instead it will feed off the inherent weaknesses present in many Information Technology environments and the consumer and business need for increased dependency on technology. Next Generation Forensics (NGF) is a term which should not be used lightly. It refers to a cold hard view of the current approaches and to a certain extent a change in mind set. So you may ask what is NGF and who are our NGF practitioners?

NGF practitioners will need to embrace the mandatory requirement of understanding cybercrime, the impact and risks posed by malware, inadequate IT Controls, dark web access and social engineering practices. Furthermore, the multi-jurisdictional layering associated with cybercrime brings into question the importance of Cyberlaw and the considerations that need to be made when investigation an incident across multiple jurisdictions. There is still an important role for some of the traditional outputs associated with investigations, such as forensic interviews, analysis, analytics, financial reconciliations, affidavits and the like, however the approach to identifying key persons of interest and/or perpetrators is where the need for critical reform resides. However the NGF practitioner will need to have the broad based skills set that will enable them to conduct multiple facets of Forensic Services such as data collection, imaging, processing of data, eDiscovery reviews and interviews. Speed of response, technical considerations, legislative compliance and evidence handling will be key areas of focus when taking on the current cyber-crime infestation. Financial crime has gone digital and the capabilities of criminal are fast developing into a formidable force which is sadly outpacing the ability to respond from both an organisational and law enforcement perspective.

Prevention and detection approaches will require equal reform since many of the risks identified from an IT perspective may pose significant opportunity for tech savvy criminals to exploit. Fraud Risk Assessments, Awareness and Education, Compliance Disclosures and Forensic Analytics will now need to factor in the IT infrastructure related risks. In order to adequately address this the NGF practitioner will need to have a sound understanding of these risks and the appropriate mitigation strategies.

In summary the bridge between tradition and technology needs to be developed, fast. Failure to take cognisance of this vital component of Forensic Services will most certainly increase the risk of both financial and reputational prejudice resulting from criminal activity within the cybercrime context.

For more on the topic contact:

Clayton Thomopoulos
Director, Risk Advisory: Forensics
Email: cthomopoulos@deloitte.co.za
Tel: +27 11 209 8275

 

 

About the author

Clayton Thomopoulos

Clayton is a Director in Deloitte Risk Advisory and is a Certified Fraud Examiner (CFE). He has approximately 17 years Forensic experience in the financial services and public sectors, specialising in Fraud Risk Management, Investigations, proactive input regarding data analytics parameters and development of fraud and corruption prevention strategies. He is currently the Deloitte National Leader for eDiscovery, Forensic Technology, Fraud Prevention and Detection.

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