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bank muscat conference on financial crimes calls for effective fraud policies

MUSCAT, 3 October 2012 - A conference on financial crimes hosted by bank muscat in collaboration with the Royal Oman Police (ROP) concluded on Wednesday (3 October 2012) with a call to exploit intelligence from emerging threats to identify new procedures and counter-measures to reduce risk and protect financial assets. The conference noted that to effectively mitigate financial crimes, companies must establish a code of ethics, develop fraud policies and invest in a communication and training program on fraud and corporate fraud policies for all employees. They also should ensure proper segregation of duties for key activities and functions, besides setting up appropriate recruitment procedures to select the right candidates. Establishments should know key fraud risks and controls and monitor them regularly. They must also set up a whistle blower hotline and pursue sound recruitment policies and psychometric testing as well as develop a fraud risk assessment process.

A large turnout of senior representatives from the ROP, Central Bank of Oman, Capital Market Authority, corporates, banking establishments and media attended the conference which focused on financial crimes such as electronic crimes and money laundering and the widespread usage of forged credit cards globally.

Thomas Totton, General Manager – Internal Audit, said: “bank muscat is proud to host this conference which brought organisations in Oman together to discuss ways to mitigate financial crimes in their business areas. The conference was a tremendous success and we are delighted to present high quality experience and content from which all participants have learnt much. bank muscat looks forward to playing a bigger role as there is significant demand for such events. The bank has developed expertise in tackling financial crimes and is committed to complementing government efforts in ridding the Sultanate of this menace and provide protection and security for financial assets.”

Hussam Al Abed, Financial and Banking Crimes Advisor, said: “The conference focused on emerging new crimes, especially cyber crimes, targeting banks and financial institutions, leading to huge losses. Law enforcement agencies, regulators and financial institutions need to come together to form a solid front against financial crimes, which are becoming more sophisticated and complicated, hence we must be prepared to counter these challenges. We congratulate bank muscat for hosting this conference which assumes significance in light of the emerging trends in financial crimes.”

Abdullah Al Mamari, Anti-Money Laundering Manager, bank muscat, made a presentation highlighting a 10-step plan to an effective anti-money laundering (AML) programme. He said that all financial organisations should have a money laundering reporting officer (MLRO) in place and the anti-money laundering (AML) policy should be an expression of a commitment to fight against financial crime and the financing of terrorism. Failure to comply with AML laws and breaches of financial sanctions can have serious consequences, he added.

Cyber thefts cost firms $1 trillion worldwide and an estimated $110 billion was spent globally to combat cyber crimes over the past 12 months.  According to ROP data on financial crimes, bounced cheque cases in the Sultanate rose from 2901 in 2005 to 4375 cases in 2011. Comparative data for the period between 2006 and 2011 for financial crimes reveal that embezzlement cases rose from five in 2006 to seven in 2011, breach of trust cases rose from 312 in 2006 to 724 in 2011, fraud cases rose from 449 in 2006 to 878 in 2011, cyber crimes rose from 2 cases in 2006 to 20 cases in 2011 and money counterfeit cases declined from 104 cases in 2006 to 60 in 2011.

Six cases of ATM, credit cards fraud were reported in 2008 accounting for a loss of RO 95,000 which declined to four cases in 2011 accounting for RO 25,000 losses. Financial crimes committed by employees of financial institutions and relating to customer accounts rose from two cases in 2008 accounting for losses of RO 85,000 to 13 cases in 2011 accounting for losses of RO 371,000.

Cyber crimes on banks and money transfer and exchange houses accounted for only one case in 2008 involving losses of RO 12,000 which rose to six cases in 2011 accounting for losses of RO 600,000. Comparative statistics between conventional financial crimes and cyber financial crimes during the period between 2008-2011 showed that 12 per cent of these crimes were civil crimes, 15 per cent typical crimes whereas 73 per cent were cyber crimes leading to financial abuse loss accounting for more than RO 10 million.

A survey done by Ernst & Young revealed that widespread bribery and corruption was a major cause for financial crimes. Those companies that had a fraud strategy also tended to have an anti-bribery and corruption strategy. Fraud continues to be a concern for businesses in the region and the existence of policies and procedures to prevent it remains patchy. While two-thirds of respondents to the survey agreed that fraud was a major issue, only half of the respondents worked for organizations with a formal anti-fraud policy. Some responses to fraud reflected a reluctance to confront it because of fear of reputational damage.

Roger Byrne – Partner, Banking, and Gorvinder Pannu – Senior Associate, Employment, Trowers and Hamlins, made a presentation on ‘Disciplining employees for financial crimes committed at work’.

Simon Padgett, Director Forensic Services, Protiviti, made a presentation on ‘Profiling the Fraudster’. He noted that 82% financial crimes were committed by employees whereas a third of the frauds were committed by management. To be able to effectively analyse and prioritise fraud risks, organisations should evaluate the human element in the fraud risk, he added.

Sam Abraham Parayil, Finance and Compliance Manger, Oman & UAE Exchange Centre, said: “We immensely benefited from the conference which focused on all relevant issues relating to financial crimes. People involved in this sector need to be aware of the ramifications of organized crimes, which are on the rise globally. This was an excellent opportunity to update ourselves and learn from the presentations made by experts in this field. We thank and congratulate bank muscat for this commendable initiative. ”