Fraud Reporting for L&D & Compliance Professionals: 5 Simple Steps

Despite the high-profile nature of fraud, some employees are nervous or reluctant to report fraud. They may not know what process to follow, whether there will be repercussions for them if it’s their employer, or perhaps they are unsure whether or not activity is even fraud.

Any organisation can experience fraud – but sectors like banking, insurance and government bodies are particularly vulnerable due the large amounts of money criminals can extract.

As fraud risk continues to grow – exposing organisations to financial losses and reputational damage – employees must be able to identify and take appropriate steps to prevent it. 

Regular and targeted training develops their awareness about the types of fraud they could encounter and how to report it.

Key takeaways:

• Types of fraud. Understanding the types of fraud is the first step in preventing it.
• Where should you report fraud? We look at which authorities employees should report suspected fraud cases to.
• Take preventative action. Taking a proactive approach to fraud, which includes regular training for employees, can help prevent it happening in the first place.
  
  
  See our Fraud Prevention Training Package

A step by step guide to reporting fraud

There may be times when employees have to report fraud to their manager – or if they suspect their employer is acting fraudulently, to the police and/or Action Fraud. 

Here is a five-step guide to help them navigate the process and enable compliance and L&D teams support them through policies and training. 

1. Understand the types of fraud

Under the UK Fraud Act, there are three key offences that employees must be able to recognise:

• Fraud by false representation: Where a perpetrator benefits or causes a loss to someone else by falsely representing themselves, either expressly or implied.
• Fraud by failing to disclose information: Making a gain or causing a loss to another by failing to disclose information they were legally obliged to share.
• Fraud by abuse of position: Someone in a position of responsibility dishonestly abuses the position to make a gain or cause a loss.

Are tax avoidance and evasion types of fraud?

Understanding the characteristics of tax fraud is also essential for many employees. 

Tax avoidance and evasion are distinct – the first is legal while the latter is illegal. Avoidance may fall into an ethically grey area but it would not count as fraud. Evasion is illegal and often includes activities such as deliberately hiding earnings, or obscuring tax figures.

Employees who notice tax fraud in their own business, or are suspicious about another company they work with, should use the HMRC tax fraud reporting service. Submitting a report can help HMRC punish the offender, possibly leading to criminal proceedings.

What is the link between cybercrime and fraud?

Four-fifths of all reported fraud in the UK is related to cybercrime. In a connected world, it’s easier than ever for offenders to falsely represent themselves or maliciously exploit information to defraud consumers, employees and organisations. 

Organisations need to be on their guard against malicious attacks. That includes regular training to help employees understand the risks and practice good cybersecurity practices. They should also feel confident reporting any potential attacks to their managers, so they can take action to contain the threat.

2. Gather the evidence

As with any crime, employees will need to provide evidence. Even a basic level of detail describing the situation, business in question, details of the activity and time/date logs will be helpful. However, it’s helpful to provide more context and detail where possible. 

3. Identify the correct fraud authorities

There are a number of authorities who handle fraud in the UK – including Action Fraud and HMRC. Employees should also escalate suspected cases to their manager unless they suspect their organisation of fraud. 

Who to report suspected fraud to (note that it might include more than one organisation)

• Action Fraud for serious cases, which it will refer to the National Fraud Intelligence Bureau (NFIB) for investigation
• Action Fraud for suspicious emails, calls or texts (e.g. phishing attempts)
• HMRC for tax avoidance and evasion using the tax avoidance reporting page.
• Banks in the case of lost money

4. Reporting tools

Reporting fraud in the UK is straightforward. The easiest way to do it is online using the Action Fraud and HMRC operating easy reporting tools, which are accessible 24/7.

In the case of Action Fraud, users need to create an account – and can track the progress of their report online and via email. They can also call 0300 123 2040.

5. Take preventative steps

Having good reporting processes in place is key – but the goal is to prevent fraud from happening in the first place. 

Here are some of the ways a proactive approach to training can help: 

• Builds awareness of the types of fraud and how it’s changing
• Uses scenarios to bring situations to life
• Underlines the importance of good security practices, including choosing strong passwords, data access control the importance of multi-factor authentication
• Empowers employees to report activity, following correct processes
• Properly-documented, it provides a record of training to demonstrate compliance with financial crime regulations

Want to learn more about Fraud?

Our Essentials Library contains e-learning content designed to help organisations meet fundamental compliance requirements. If you are looking for focused training, our Fraud Prevention Training Package and Financial Crime Training Package also offer a complete solution for your compliance programme. Courses in our libraries include:

• Fraud Prevention Training Course
• Identity Crime Training Course
• Financial Crime Prevention Training Course

We've also created a comprehensive AML & CTF roadmap to help you navigate the compliance landscape. If you would like to access leading insights and compliance tips, you can browse our free resources by topic to find guides, modules, compliance bites and more.