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Category Archives: Blog

Suppliers and customers, adding to the framework

Read Time: 7 minutes

In previous articles we have dug into the framework that is needed to detect and prevent corruption in your business. We have spoken about the framework in detail, as well as how it uses a customizable decision-making model to help identify the likelihood of an individual’s future behaviour. This risk-scoring model is used on a continuous basis to ensure your business is able to pick up on any changes of behaviour/circumstances over times.

In this article we build upon the employee element of the framework by using it to assess all suppliers and customers to your business, all of which, of course, are operated by individuals.

By applying framework to the office bearers of companies which are your suppliers and customers, you will be in a strong position to assess the risks of corruption associated with prominent people connected with them. There are three elements to consider here: corruption by the company, corrupt acts by its office bearers or any sanctions against the company or office bearers, and the company’s political exposure.

In addition to the above, the other components in our customer and supplier framework will assist you to detect, identify and prevent the risk of corruption or fraud damaging your supply chain or other important relationships.

We have discussed the risk-scoring methodology in previous articles regarding the framework based around individuals and this builds upon it for your suppliers and customers as detailed below:

  • Company Details:
    Does the company registration number, company name, trading names, registered address of the head office and associated branches correspond with the company’s office registry?
  • Tax compliance:
    Are the company’s registered tax details confirmed and authentic?
  • Bank accounts:
    Are the company back accounts verified as being authentic and not black-listed?
  • Company Office Bearers:
    What are the risk scores from the framework for each of the directors, executives and key management team?
  • Beneficial ownership of the company:
    What are the risk scores from the framework for each of the directors, executives and key management team of the beneficial owners?
  • Professional Advisors:
    What are the risk scores from the framework for each of the directors, executives and key management team of the professional advisors? Case studies have demonstrated that auditors and lawyers were involved, either wittingly or unwittingly, with examples of state capture. In some cases, there were clear, demonstrable links between PEPs and corrupt deals associated with some professional advisors. Undertaking a risk appraisal for the professional advisors is a key element in determining your exposure to risk.
  • Financial distress:
    Determine whether the person or company is in financial distress by considering their financial status, levels of expenditure, if they are under debt review or they have a financial judgement against them. Be sure to consider the value of the judgement and the time since issue, if a judgement exists, to determine its relevance as a risk factor.
  • Financial irregularities:
    Movement of money during corrupt activities is one of the key things that investigators look for when tracing corrupt practices. People involved in corrupt practices do their level best to shield their transactions from scrutiny. Consider the risks to your business if an employee or business partner of the company being assessed has a trend of moving large amounts of money between mortgage bonds, bank accounts or other financial instruments such as insurance policies etc These movements would be considered to be out of alignment with the person’s lifestyle.
  • Solvency:
    Determine the status of any action against the company such as liquidation, debt review, provisional or otherwise.
  • Media:
    What is your assessment of the positive and adverse social and mainstream media reports about the company? Do they suggest a risk of corruption, illicit activities or any history of racist or hate speech?
  • Adverse labour action:
    What is the company’s track record of working with organised labour? Are there any material legal cases in progress or court judgements that could result in financial hardship for your customer or supplier?
  • Sanctions:
    Is the company or any of its directors/office bearers under any sanction by an international body?
  • Compliance program:
    Are adequate measures being taken to prevent corruption? Are the company’s compliance protocols sufficient?
  • Human rights and anti-slavery:
    What measures have been taken to comply with the international standards and norms and how robust are they determined to be?
  • Occupational health and safety:
    What is your assessment of the company’s compliance with the various health and safety provisions?
  • Brands:
    Does the company have the legal right to own, market or represent the brands that they claim? Has any brand representation right been withdrawn? Are any of the associated brands considered to risks of corruption, intellectual property infringement or general unethical business practices?

Taking the framework further

As the data collection for an individual provides you with a 360-degree view of the risks at play, the same can be applied when looking at external companies. By collecting the data on a company level, you are able to aggregate the data by sector, by position in the value chain and then by the company in its entirety. In turn, you will be able to build dashboards that display the level of improvements you have made to risk of corruption throughout the organisation value chain and serve up the data by department, by internal process or by company as a whole for the board to evaluate.

Further to this, because you are undertaking the data collection on an on-going basis, you can track and quantitatively measure improvements on a monthly, quarterly, half-annually or annual basis. You will be able to update your board on improvements you have made and, as a result of the on-going monitoring, you will also be in a position to detect, identify and prevent harm as a result of risks of corruption by business partners before they impact,  which will allow your organisation to take action to prevent loss.

Closing the loop

Once you have collected and assessed the data for employees (hyper-link to the framework for individual article), suppliers and customers you will be able to easily identify intersects between these data sets.

This is a crucial element as it will allow you to identify possible risks of collusion between employees, suppliers and customers.

One of the key determinants in corrupt transactions is a conflict of interest. Corruption Watch reported that “the risk of corruption increases when public duties and the private interest of an involved actor are conflicting because there is a chance that the public position might be exploited to the advantage of private interests”. By connecting the relationships through directorships, social and public media between employees, their families and suppliers and customers you are in a strong position to determine if any of these relationships pose a risk to your company.

The Framework Explained

Putting together a working detection and prevention framework is the first step in safeguarding your business against corruption. We have previously provided a summary of our framework model, which has been used by organisations in South Africa. This should help you better understand how it can help simplify your task in preventing corruption from damaging your business. To revisit this article, click HERE.

Protect Yourself

Corporate Insights has developed a one-of-a-kind modular system that combines TransUnion’s big data universe with our own artificial intelligence and smart logic algorithms. It enables you to continually monitor, detect, act on, and prevent critical risks, both internally and externally.

The Corporate Insights system will allow you to protect your business from succumbing to the typical pitfalls that lead to corruption. It also comes with a host of additional benefits to ensure your company continues to operate optimally, free of the threat of corruption.

Click here to book a demonstration or call us today to find out how you can transform your business.

Five reasons risk-scoring models will help your business

Read Time: 5 minutes

The people you employ are critical to your business. Ensuring that you have the right people, in the right positions throughout your organization is critically important to its success and sustainability. Maximizing the effectiveness of the tools you use to ensure you select the right people is just as essential.

In other blog posts, we have spoken about the framework we use to detect and prevent corruption from damaging your business. Built into this framework, is a customizable decision-making model that helps identify the likelihood of an individual’s future behaviour, which will fall within a range of acceptable performances based on their past performance in several areas.

In the world of science and technology, this is known as using predictive analytics to statistically model future performance.

Here are five ways that risk-scoring models help your business.

  1. Increasing Productivity and Profitability
    One of the most significant advantages to using decision-making models is to exponentially improve productivity and profitability. Processing hundreds of thousands of applications in an hour is nothing for a decision-making model, whereas only a handful of applications could be properly processed by a human being.
  1. Decisions Are More Consistent

    By automating the decision-making process, you can be sure that the same methodology is used each time an application is processed.

    The decision-making model can even consider factors like your definition of an acceptable criminal past, if any (for example non-violent misdemeanours involving speeding), the position (accounting department, factory floor or elder/childcare), the place you are considering putting a person (locations that have been identified as risk hot spots etc), or even the Types of claims that have been filed against an individual (eviction notices, tax liens, bankruptcies)

  2. Impartial Decisions
    Decision making becomes largely objective and impartial when using a decision-making model. Unintended discrimination based on subjective or unwanted factors such as race, ethnicity, age or gender can be reduced to significantly or even be wholly eliminated. We do not collect or report in our solution upon race, ethnicity, religious or political affiliation for example.
  1. Customizing Your Decision-Making Model
    While scoring models are certainly not unique (we are all accustomed to looking at our credit score to ascertain whether we can afford a new house) client customizable decision-making models are certainly less discussed and less understood.

    With a client-designed decision-model, a multitude of factors can be built into the decision and those factors can be adjusted to the risk comfort and the business model of your organization.

  2. Quality Reporting
    The final valuable differentiator is the way that we report the results to you. You do not simply see one final “numeric score” and recommendation. Rather, you see the results of each input that goes into the decision so that you can understand what gave rise to the output of the decision-making model – the score and the recommendation. This empowers your organization to explain the results to the executive team or even to contextualise the results where your business model allows for it.

Enhance your risk score and profile further by setting priorities for the various risks by position. So, for example, if you feel an employee in your financial department should have a minimum threshold of 4 on the financial component of your framework, as opposed to an administrative role that does not, you can make the adjustments.

You company should not have a one-sized fits all approach to its scoring and this is something we identified as a weakness in companies we interviewed.

By customizing your framework to the way that you work, you can highlight areas you want to focus on and improve. You can apply a higher level of scrutiny on these areas, which will further benefit your business in the future.

Making the data work for you

By collecting the data at an employee level, you are able to aggregate the data by department, by position and by company. We use a range of comparative measures to help you analyse data. You will be able to build dashboards that display the level of improvements you have made to risk of employees throughout the organisation. You will then be able to serve up the data by department, by internal process, or by company as a whole, for the board to evaluate.

As we are undertaking data collection on an on-going basis; you can track and quantitatively measure improvements on a monthly, quarterly, half-annually or annual basis. Whilst you will be able to update your board on improvements you have made and , as a result of the on-going monitoring, you will also be in a position to detect, identify and prevent harm as a result of risks of corruption by employees before they impact which allows your organisation to take action to prevent loss.

The framework explained

Putting together a working detection and prevention framework is the first step in safeguarding your business against corruption. We have previously provided a summary of our framework model, which has been used by organisations in South Africa. This should help you better understand how it can help simplify your task in preventing corruption from damaging your business. To revisit this article, click HERE.

Protect Yourself

Corporate Insights has developed a one-of-a-kind modular system that combines TransUnion’s big data universe with our own artificial intelligence and smart logic algorithms. It enables you to continually monitor, detect, act on, and prevent critical risks, both internally and externally.

The Corporate Insights system will allow you to protect your business from succumbing to the typical pitfalls that lead to corruption. It also comes with a host of additional benefits to ensure your company continues to operate optimally, free of the threat of corruption.

Click here to book a demonstration or call us today to find out how you can transform your business.

Lifestyle Assessment framework for an individual

Read Time: 7 minutes

In a previous article, we provided insights on putting together a working detection and prevention framework, highlighting it as the first step in safeguarding your business against corruption and fraud. This framework allows for continual assessment of all areas of your business and will ultimately enable your employees to make risk-based decisions and enjoy the 360-degree view of corruption risks that you have developed for them.

In this article, we consider how to go about a lifestyle assessment for an individual, whether it be an employee, supplier or customer.

The continuous monitoring of risk is a fundamental element of the Corporate Insights framework and applies to the screening of employees, suppliers and customers, before you employ or engage with them, and on an ongoing basis thereafter.

The need for this is obvious, the framework allows you to detect, identify and prevent the risk of things going wrong as you grow and expand your business. Key to this is identifying the risks. The Governance Institute based in the UK recommends that all companies employing effective risk management do so “on a continuous basis to keep track of changing risks” to satisfy the primary objectives of “identifying, assessing, monitoring and controlling risk”.

Identifying the risks

The framework used by Corporate Insights considers a number of tests or factors of information to be identified, collected and analysed to prepare a life-style analysis for an individual. Our online system considers a minimum of 27 different tests in a lifestyle assessment.

Below are the categories that make up the tests.

  • Identity documents:
    Ensure that the Identity Number that employees present to you is valid, issued to them and does not belong to someone else or someone who is deceased. The same test should be applied to spouses, family members and directors of your suppliers or customers. You should also verify that these identity numbers have not been implicated in a financial crime or the person has not been convicted of an offence.
  • Financial distress:
    Determine whether the person or company is in financial distress by considering their financial status, levels of expenditure or they have a financial judgement against them. Do not be explicit here, consider the value of the judgement and the time since it was issued, if a judgement exists, then it’s to determine whether it’s a relevant risk factor.
  • Financial irregularities:
    Movement of money during corrupt activities is one of the key things that investigators look for when tracing corrupt practices. People involved in corrupt practices do their level best to shield their transactions from scrutiny. Consider the risks to your business if an employee or business partner has a trend of moving large amounts of money between mortgage bonds, bank accounts or other financial instruments such as insurance policies etc.
  • Income that exceeds earnings:
    Corruption in the form of kickbacks could be paid into an employee’s bank account. Equally, employees may be earning income from sources that are a conflict of interest or a competitive business. By detecting and identifying income that is materially in excess of salaried earnings that has not been declared to you, could be a source of risk. A word of caution. People will have legitimate sources of additional income. You should factor these considerations into your framework. Examples of these areas could be non-executive directors, retired or semi-retired persons and consultants.
  • Spousal earnings:
    Financial risk indicators should be considered in conjunction with family earnings to ensure that you are not detecting false positives or genuine sources of additional income, such as from investments or independent directors’ fees. Equally, there are cases that have been discussed where business relationships and income was routed through family members or spouses. This can be an important area of consideration when you are looking for elements of collusion.
  • Mobile phones:
    Flag employees with unusually large numbers of mobile phones connected to their names. Determine if any of those mobile phones have been blacklisted or blocked by the mobile networks or if the number given is non-existent. Mobile phones are frequently used in the commission of financial crime and if a number or handset is blacklisted it is a leading indicator of risk.
  • Politically Exposed Persons:
    In the wake of the Guptas and State Capture,
    politically exposed persons (PEPs) have greater prominence in the South African business landscape. Although not all persons who are PEPs pose a risk to business, not knowing a person is a PEP could expose you to risk or disqualify you from trading with UK or US companies.
  • Social Media Activity:
    Social media activity today is pervasive. Significant numbers of employees have caused damage to their employers’ reputation, sometimes resulting in crisis and financial loss as a result of social media postings. Your risk detection system should be looking at risks from employees that post hate speech, racist comments, use of drugs or illegal substances and inappropriate comments. Equally social media connections to undeclared commercial interests, such as ‘side hustles’ that would give rise to a conflict of interest are sources of risk indicators. All social media activity, in the mainstream, poses subjective risks and should be evaluated against the contents of your social media policy provisions.
  • Undeclared commercial Interests:
    Undeclared commercial interests that result in a conflict of interest are considered leading indicators of risk. You should ensure that you compare these results with your declarations of interests and remove any results for deregistered companies etc, other than companies that were liquidated through a judicial order etc.

Assess the risks

Once you have identified your risks, you will need to categorise them into areas of lesser and greater risk. These are determined by identifying threats to your organisation as a result of corruption, estimating their likelihood and impact on your organisation.

The determination of the risk rating can be determined by simple mathematical.You may assign a low risk as a value of “1”, an extreme risk as a value of “5” and grades of risk in between as minor, moderate and high as intermediate values.

So, for example, you could categorise only extreme financial distress – those which have resulted in a financial judgement – as a ‘5’ and sufficient grounds to disqualify a person from future employment. Lesser elements of financial distress, meanwhile, may be viewed on a lower scale.

You should aggregate the risk scores for each category of risk to provide you with an overall risk score for the employee. By completing these risk scores across your organisation, you can build up a risk profile that spans your organisation by employee, by position, by department. Once you have determined a threshold of risk that you will tolerate, you can compare your risk profile to this threshold and set measurable changes that you wish to take, with surgical precision, to improve your risk profile.

Your improved risk profile can be used to reassure stakeholders, investors and customers that you have taken demonstrable steps to prevent the risk of corruption occurring in your operations. In fact, compared to companies or competitors or yours that do not take any steps to identify risk, you can confidently acclaim to be insusceptible to the risk of corruption in comparison.

Protect Yourself

Corporate Insights has developed a one-of-a-kind modular system that combines TransUnion’s big data universe with our own artificial intelligence and smart logic algorithms. It enables you to continually monitor, detect, act on, and prevent critical risks, both internally and externally.

The Corporate Insights system will allow you to protect your business from succumbing to the typical pitfalls that lead to corruption. It also comes with a host of additional benefits to ensure your company continues to operate optimally, free of the threat of corruption.

Click here to book a demonstration or call us today to find out how you can transform your business.

*Confidential information stays that way

All our products and services have been thoroughly evaluated by a global law firm, a recognised National Credit Act regulatory expert and TransUnion’s international and South African compliance and legal departments, to ensure that consent is properly obtained, and that the information received is well protected. Our system is fully compliant with POPIA, the National Credit Act plus we comply with TransUnion’s strict guidelines on data security and handling of personal information. In addition, we use block-chain to encrypt and secure our electronically signed contracts so that you can verify its integrity at any stage in the commercial process.

Putting together a detection and prevention framework

Read Time: 6 minutes

Putting together a working detection and prevention framework is the first step in safeguarding your business against corruption. In this blog, we will provide a summary of our framework model, which has been used by organisations in South Africa. This should help you better understand how it can help simplify your task in preventing corruption from damaging your business.

The framework has three areas of focus for assessment: employees, suppliers and customers. The framework breaks down the collection of information into individuals and companies. Individuals may be employees of your organisation or employees of your suppliers and customers. By collecting information against the criteria you have identified for your employees, you will have a template to apply for key individuals, such as directors or board members, of your customers and suppliers. All collection of information you undertake should comply with the relevant legislation, which most probably would be POPIA and the National Credit Act.

Finding your ‘heroes’

Your first step is to identify the employees who will manage the framework.

Ensure that these ‘heroes’ are employed across various departments in your business, but working together as a unit, ensuring the entire business is being monitored in the same way.

This will reduce the risk of division and silo mentality in managing the risks that you face.

It is important to remember that different departments have different needs and require different information. Enabling these team members to work together to evaluate the risk of corruption or fraud as a total problem, rather than a problem part owned by each responsible area in your business; regulatory risk (compliance), people risk (HR), operational risk (risk departments) and internal controls (Audit) you will achieve better and more agile “360 degree” decisions. You will receive important information on which to take action on before the problem has damaged your reputation and brand.

Identify your pain points

Next, identify your corruption risk priorities and needs.

These are known as your “pain points” and could be identified through previous engagements with employees, suppliers or customers that have raised red flags.

For example, these could have been raised during an application process for a new employee, through a new supplier or an existing supplier entering into a new venture. Typical pain points could be a process that is overly manual so that only a relatively small number of evaluations can be undertaken in a year compared to your employee or vendor base. In such circumstances, solutions that are adopted focus on certain perceived areas of risk leaving large sections of your value chain relatively un-monitored and potentially exposed to risks that may not be detected.

Evaluate the existing methods of detecting, identifying and preventing these risks from causing harm. Compare the outputs of your current solutions to the pain-points that you have identified. You should be able to quickly identify any gaps that exist. These gaps will typically fall into one of the four areas that we discussed in previous articles:

  • inability to detect and prevent the wrong behaviour without impacting ability to grow the business
  • inability to detect and prevent the wrong behaviour throughout the engagement life cycle
  • inability to reduce the complexity of compliance and reduce compliance failures
  • inability to gather, have on-hand and report relevant information or evidence to support a claim of wrongdoing
  • releasing skilled resources from information collection and analysis tasks and allowing the resources to take up high level tasks, such as determinations about your risks.

One way of identifying your pain points is through risk assessment. These assessments come in a number of forms, some further and along and more accomplished than others, but something they all have in common is that they are not updated or refreshed regularly enough, nor do they sometimes monitor all the risks which require assessment.

Some companies we have worked with have only screened employees upon appointment to the company. Screening was not undertaken nor mandatory throughout their employment or before a promotion. Another example is that while suppliers were screened before being contracted, only a small percentage of service providers were evaluated throughout their journey with their customer. Very few, if any, companies we have worked with undertook due diligence evaluations upon their customers.

As such,

The framework you will develop and implement for your company will make risk driven evaluation of employees, customers and suppliers an ongoing, continuous activity.

This will ensure that the parts of your business that you consider “pain-points” will be subject to evaluation and analysis to ensure you have no priority risks that are left unattended.

Outcomes and key performance areas

It’s time to identify your desired outcomes, along with key performance areas of the detection system you will be putting in place. For example: “reduce the number of risky job applications to by 50% and save X Rands.”

You can do this by putting together a list of tasks:

  • Identify the users and uses analysis you will produce
  • Describe the target population and the service environment; the people or companies that you will assess.
  • Identify your requirements
  • Existing methods
  • Pain points
  • Desired state
  • Describe solution
  • Cost, impact, feasibility
  • Assess the importance of the internal customer requirements
  • Communicate the results

By properly evaluating and determining your requirements, you will have a greater understanding of information you need to collect, and in doing so, will avoid wasting time collecting unnecessary data.

Continuous, risk-driven evaluations

With the above in mind, it is important that the framework you develop and implement for your company makes risk driven evaluation of employees, customers and suppliers an ongoing, continuous activity. This will ensure that the parts of your business that you consider “pain-points” will be subject to evaluation and analysis to ensure you have no priority risks that are left unattended or unmonitored.

By allocating attention to the risks you know you need to monitor when you have implemented your framework, you will have tailored a solution to suit your circumstances and business objectives. This will enable strengthened governance and improved reporting, which will in turn create a culture of confidence, as your employees will feel enabled and in control of risks the business faces.

By implementing this type of framework, you will enable your employees to make risk-based decisions and enjoy the 360-degree view of corruption risk that you have developed for them.

By monitoring the risk you have identified on a continuous basis, your employees can use the data and the results to make better risk decisions and transform your business. This will enable them to protect the reputation of the company and ultimately, generate greater returns for shareholders and the community.

Protect yourself

Corporate Insights has developed a one-of-a-kind modular system that combines TransUnion’s big data universe with our own artificial intelligence and smart logic algorithms. It enables you to continually monitor, detect, act on, and prevent critical risks, both internally and externally.

The Corporate Insights system will allow you to protect your business from succumbing to the typical pitfalls that lead to corruption. It also comes with a host of additional benefits to ensure your company continues to operate optimally, free of the threat of corruption.

Click here to book a demonstration or call us today to find out how you can transform your business.

What is a lifestyle audit and why are they necessary?

Read Time: 7 minutes

In an attempt to prevent and detect corruption, individuals are being increasingly subjected to life-style audits (also known as lifestyle assessments or simply audits). But what exactly is a lifestyle audit and how does it work to detect or prevent corruption.

Simply put,

A lifestyle audit compares the known income of an individual with their standard of living to identify gaps / indicators that the person may be living beyond their means.

They are considered by many companies as a critical tool to detect corrupt activities and in many circumstances are carried out by an employer suspecting an employee of fraud.

A local example of this is in 2010, when the City of Durban municipality embarked upon a program of lifestyle audits for all workers during 2010 in an attempt to root out “rogues fleecing the city of millions of Rands”. The program came hot on the heels of claims by the Auditor-General that the city lost more than R100-million through fraud and corruption during 2009. Contracts valued at a further R680 million had “deviated” from normal procedures.

During the same period, the city stated it was also probing how contracts worth R100-million had been awarded to spouses, children or parents of senior city officials, as well as 13 cases of fraud, amounting to R48.5 million, relating to non-compliance with its supply chain management policy.

Not confined to Government

Lifestyle audits, of course, are not only confined to state organs and those responsible for issuing or receiving tenders from state owned enterprises. As already mentioned,

The commercial world has also adopted lifestyle assessments as a tool for preventing and detecting fraud.

KPMG, for example, learnt a number of costly lessons from their association with the Gupta family and in 2019, the company began evaluating the financial lifestyle of employees and their close family members. These evaluations were undertaken by independent parties and the policy applied indiscriminately.

“Every single partner, their spouses and dependent children go through this. Even I, my wife and my 19-year-old student son had to undergo integrity and lifestyle checks done by an independent party”, said KPMG CEO Ignatius Sehoole of the assessments.

Why is it necessary?

Several reports and studies have outlined that people who are generating wealth from illicit activities, such as corruption and crime in general, conceal their assets and sources of wealth to avoid detection and the penalties for committing crime. Forensic investigators when investigating a subject would want to understand how the subject conceals misappropriated assets or how they were acquired from fraudulent activities.

Rather than store or save the proceeds of illicit gain in cash, subjects may spend lavishly on conspicuous items such as cars, homes and investments. Typical investments held in these types of crime are insurance products and or investments in shares companies.

ACFE, in its training advisories explain that subjects may also attempt to avoid detection and conceal their assets by transferring them to another closely connected person, such as:

  • Family members or close parties under their control
  • Transferring assets to a trust
  • Repaying a large portion of their home mortgage or vehicle finance loans
  • Accumulating large numbers or loan finance contracts such as mortgage bonds or vehicle finance loans

It is necessary then to conduct a lifestyle audit in order to ascertain, amongst other things, whether an individual has misappropriated funds or hidden assets; highlight undeclared income; narrow down possible fraud suspects living beyond their means and to identify direct evidence of fraud.

A lifestyle audit of an individual requires the collection of information from a number of sources. In a forensic investigation, some of these sources may include:

  • Regulatory agencies
  • Court records
  • Government records; births, marriages and deaths
  • Land registry office
  • Court litigation records
  • Bankruptcy data
  • Credit bureau data
  • Credit card and bank account data
  • Other commercial databases
  • Employer records and data sources, e-mails, mobile phone data etc
  • Social media postings
  • Press and media searches

What are the benefits?

The key benefits to come from a lifestyle audit can be to identify hidden assets, direct the forensic investigation and help with the recovery of any assets that are the proceeds of crime.

In selecting a subject for lifestyle audit, the primary means in doing so are when a person has been in close proximity to a crime or being labelled a suspect. An immaterial number of people were chosen as a result of risk scoring, risk profiling or the identification of red flags.

The thinking here is that a person who has been judged to be living beyond their means could be in financial distress due and in need of additional funds – and so may be motivated to commit fraud or corruption– or equally so, this subject may have already committed a crime to accumulate assets or finances disproportionate to their income.

Once found, the investigators would need to ascertain whether or not the accumulation of wealth is linked to a crime. Have there been irregular transactions, movement of large sums of money or any other indicators aimed at concealing illicit gains.

What is the end game?

The veracity and accuracy of evidence and data is sometimes extremely difficult to determine. Information systems may contain erroneous or outdated information. There could also be a lag or time delay between information changing and being updated on a system. Such delays can have a negative impact on the course enquiry in an investigation.

The objective is to provide an opinion upon a subject’s involvement in a crime or transgression, while the test is to determine if the allegations made may be sustained, usually in a court of law. A secondary objective may be to enable an organisation to take action, for example, a civil action to recover monies or assets or terminate a contractual relationship.

None of these outcomes, however, would develop or identify red flags to prevent fraud and corruption. They may well assist in identifying future events, but in principle, they are used to confirm that corruption or fraud has been detected and to identify the person or persons involved in the transgressions. Essentially, they occur after the fact.

They can also be costly, with red-flag checking ranging from R5000 to R20 000, while a lifestyle audits as part of a forensic investigation could be up to R80 000. They can also have lasting effects on the company, damaging employee morale and a lingering culture of mistrus.

Continual Assessments

What all these methods do identify, however, is the need to identify an individual’s behaviour that points to one or more red flags, combined with an assessment of the level of wealth of an individual to determine if they could have legitimately obtained and maintain those assets. Finally, a person’s level of financial distress is considered a leading indicator of risk to commit fraud or corruption.

Companies are in need of continual assessments, despite many believing they do not have a history of corruption or fraudulent practices. if you are not collecting it and measuring it, how do you know you are not at risk?

Does your company have a deep understanding of employee and vendor risk? How is their behaviour changing over time? For example, if a vendor or an employee in a position of trust is beginning to enter into financial distress or an employee in a position of trust is amassing undisclosed wealth or income, would you know ahead of time and could you react?

It’s crucial to the sustainability of your business that you know the answers.

Protect yourself

Corporate Insights has developed a one-of-a-kind modular system that combines TransUnion’s big data universe with our own artificial intelligence and smart logic algorithms. It enables you to continually monitor, detect, act on, and prevent critical risks, both internally and externally.

The Corporate Insights system will allow you to protect your business from succumbing to the typical pitfalls that lead to corruption. It also comes with a host of additional benefits to ensure your company continues to operate optimally, free of the threat of corruption.

Click here to book a demonstration or call us today to find out how you can transform your business.