Protecting Your Business From Fraud
Businesses have increasingly become the target of financial fraud and scams. Your best defence is to stay informed, alert and secure. In this month’s blog, you will find information on the most common frauds and scams that affect businesses like yours, along with key advice to help you and your business avoid becoming the victim of fraud.
Without the proper IT infrastructure, firewalls etc. you put yourself at a far higher risk of being exposed to cyber fraud. One of the more common methods of cyber fraud is attempting to replicate emails from suppliers who are requesting payment into a different bank account than normal. Any request to process payments into a new bank account should be verified face to face with the supplier, or via phone call, in addition to a written confirmation on headed paper that has been signed by a senior executive from the supplier company.
This type of fraud is particularly difficult to stop if you have a motivated employee. Cash businesses are most at risk, but many large value frauds have been committed by employees falsifying supplier documentation, processing customer refunds and hoax third party payments.
Separation of employee duties, a payment authorisation process, audits etc. can be used to combat the potential for employee fraud.
With many companies holding large amounts of personal data about the individuals they employ, this data must be kept secure and accessible only by those who need access to it and are authorised to do so. Identity theft can also include corporate identity theft with fraudsters impersonating revenue, banks and other financial institutions. Always double-check if you are in any way unsure about the identity of who you are dealing with.
This is a timely topic in Ireland at the moment. With Ireland providing higher claims pay-outs compared to many other EU countries, this has attracted several gangs and “chancers” to look for any opportunity to create a claim situation against your business. High-quality CCTV and on-going staff training can be used to counteract this, as well as installing a secure entry system to keep out any unwanted visitors.
The Department of Revenue expects that every VAT registered business thoroughly assess and determine the integrity of its supply chain, its customers, and all of the goods involved in these transactions. This responsibility lies solely with your business and, should you fail to do so, you could unknowingly involve your business in VAT Fraud.
What is VAT Fraud you ask? This is where one business charges another business VAT and fails to pay it over to Revenue.
VAT Fraud can be difficult to detect. It’s typically an extensive and complicated chain of transactions in several countries that are used to cover up what is happening. Very often the fraud takes place during the sale of high-value small items, such as computer chips or phones, but it can apply to a broad range of goods.
According to EU VAT law if a business “should have known” that it was involved in VAT fraud then it can be held liable for the defrauded VAT and possibly penalties. As VAT on goods in Ireland is generally at a rate of 23%, the potential cost for a business can be very significant. Therefore, a business must take steps to ensure that it is not an unwilling participant in transactions that could ultimately be connected with VAT fraud.
Preventing this type of fraud requires keeping your records up to date, carry out reasonable due diligence and establish the integrity of the business you are looking to deal with.
Do you have more questions about fraud? Are you concerned that you may already be a victim of fraud? Give us a call at (0) 1 54 45 375. The professionals at Solve are ready and we will be happy to answer any questions you have.