Red Book 2 Money Laundering

1
Red Book 2Money Laundering
Greg Marks
2
Session content why bother with either Red Book
or Money Laundering?

• Red Book recap - headlines
• Red Book content/links
• Red Book current status/examples/review
• Comprehensive Area Assessment Kloes
• Future self assessment/risk assessment/fred
• Money laundering headlines
• Money laundering contect/content
• Money laundering examples/dvd

3
Why bother? - Risks

• Grants
• Partnerships
• Assets
• Contracts
• Corruption
• Benefits
• False claims
• Money laundering
• Internal
• External

• Prescriptions
• Dental
• Optical
• Expenses
• Students (discounts/support)
• Insurance
• Blue Badge
• Terrorist Financing
• Lies on CVs/references
• No right to work

Loads of them, all the time, maybe especially now
4
Introductions how not to catch the criminals
5
Red Book 2
Greg Marks
6
Managing the Risk of Fraud Actions to counter
fraud and corruption - Red Book 2
7
Constant risks anyway Red Book mentions risk 30
times especially now

• There are signs of a rise in fraud indicators as
  the economic downturn tightens its grip - Neal
  Ysart, senior manager, forensic services,
  PricewaterhouseCoopers Nov 2008
• The economic downturn has led to an increased
  risk of fraud among accountants clients - the
  pressure to hit targets that have become harder
  to meet increases the possibility of accounts
  manipulation - Alex Plavsic, head of fraud
  investigations at KMPG Forensic Nov 2008

8
Constant risks anyway Red Book mentions risk 30
times especially now

• Online bank fraud doubles to 52.5m - Something
  smells phishy. The cost of online banking fraud
  more than doubled last year. Online bank fraud
  doubles to 52.5m - Financial Services - Breaking
  Business and Technology News at silicon.com
• National fraud crackdown must end the 'victimless
  crime' myth - says ABI. Post Online - National
  fraud crackdown must end the 'victimless crime'
  myth, says ABI
• Credit and debit card fraud up 14, say Apacs -
  The figures from Apacs, the UK payments
  association, show that losses on cards were
  609m, up from 535m. Which? Consumer News RSS
  feed

9
So particularly useful now, but why do it in the
first place/where did it come from what is it
aligned to?
Nolan Principles
Selflessness, Integrity, Objectivity,
Accountability, Openness, Honesty, Leadership
10
Red Book what is it?

• A framework a solid foundation for countering
  fraud
• Guidance intention to be practical / helpful /
  prompt action / not pseudo scientific
• Strategy, risk, structure, taking action
  (culture, deterrence, prevention, detection,
  investigation, sanctions, redress), defining
  success
• Why? Playing catch up can do better than
  relying on number crunching intuition
• Fraudsters have traditionally had numerous
  advantages the initiative / proactive / choose
  time to plan strike / battleground / methods /
  awareness of risks rewards
• Put us on the front foot

11
Red Book what is it?

• Deliberately short, intended to be user friendly
• Red Book 1 6 pages
• Inevitably, requests for more information /
  explanation / examples
• Red Book 2 20 pages does that
• CIPFA Better Governance Forum member
  organisations have electronic access to Red Book
  2 110 real life examples of all the 56
  questions in the Red Book

12
Managing the Risk of Fraud Actions to counter
fraud and corruption - Red Book 2
I am pleased to commend the CIPFA Red Book 2.
This valuable resource provides a holistic
framework for countering fraud and corruption
... Sandra Quinn, Chief Executive Officer
(Interim), National Fraud Strategic Authority
(NFSA) I endorse the need for an integrated
approach to tackling fraud, as advocated in the
CIPFA Red Book 2 Dermid McCausland, Managing
Director, NHS Counter Fraud and Security
Management Service Red Book 2, is an
excellent initiative that allows public bodies to
share and learn from the best practice of others
in the fight against fraud. Steve Bundred, Chief
Executive, The Audit Commission
13
Managing the Risk of Fraud Actions to counter
fraud and corruption - Red Book 2

• Nobody knows the real true cost, never mind the
  more intangible cost like harm/hurt/fear
• In pure money terms, fraud and corruption costs
  the UK 20bn a year and drastic action is needed
  to tackle it
• Red Book 2 details the essential actions for
  organisations to take to protect themselves
• Provides explanations and examples
• Acknowledged as good practice and highly
  commended by key organisations including the
  National Fraud Strategic Authority
• CIPFA launched Red Book 2 Oct 16th 2009 free
  on web to CIPFA Better Governance Forum Member
  Orgs

14
This is all acknowledged recommended by the
Audit Commission

• E.g. last Tuesday 15th Sept 2009 Protecting the
  Public Purse report
• The Red Book is One of the most authoritative
  sources of guidance on countering fraud
• The external auditors doing the work on the kloes
  are referred to the Red Book as what they would
  seek for evidence
• KLOE 2.3
• Does the organisation promote and demonstrate the
  principles and values of good governance?
• KLOE 2.4 
• Does the organisation manage its risks and
  maintain a sound system of internal control?

15
Red Book Example 1

• Red Book 3.7 Is an effective propriety checking
  process in place
• LBWF over 5,000 staff have been vetted. A
  steady rate of around 3 fail the process and the
  number that failed at the start of the process
  was 22. A number of prosecutions have taken
  place.
• Audio seminar Pre employment screening How to
  keep fraudsters off the payroll
  http//www.bettermanagement.com/seminars/seminar.a
  spx?l11481
• Power point presentation on vetting

16
Red Book Example 2

• 4.10 Has the organisation successfully publicized
  work in this area?
• 11th Feb 08 Executive pledge to stamp out fraud
• By Staff reporter
• Stamp Out Fraud is the message from the Housing
  Executive as it commences a campaign to check on
  occupancy in both its own properties and in the
  private rented sector.
• Colm McCaughley, Director of Housing
  Regeneration in the Housing Executive
  explained

17
Red Book Example 3

• 3.2 Is there strong political and executive
  support for work to counter fraud and corruption?
  
• March 18th 08 Council pledges zero tolerance
  towards fraudsters
• City councillors have backed a new policy aimed
  at furthering the fight against fraud and
  corruption.
• A new counter fraud and corruption policy was
  adopted by City of York Council at its corporate
  services executive member and advisory panel
  meeting on Tuesdayetc

18
Red Book Example 4 Blackpool
19
Red Book Example 4 - Experiencing a material
fraud - Blackpool

• Changes that have been made
• Expenditure authorisation (4.12)
• Within service
• Exchequer approvals
• System Changes (4.13, 4.15)
• Fraud risk management training (4.5)
• Hands on
• Bespoke
• Including real Blackpool examples
• Easier when the case went to court
• Further enhancement of data matching (4.16).
• Open dialogue with Audit Committee including
  insurers action plan (3.2, 4.6).
• Proactive fraud plan (1.3, 1.6, 4.2, 4.8)
• Cultural change, getting people to speak where
  they have doubts (4.9).

20

• Example 5 - Would Croyden Council have done the
  student work if Red Book 2 wasnt there?

• Quite possibly although we may not have
• Identified the risk, priority and potential loss
  in such a transparent and orderly way
• Exploited the publicity
• Made recommendations about system weaknesses to
  be followed up by audit and council tax
• Flagged risks
• Questioned ourselves robustly about the work we
  undertake
• Shared our bogus university list

21
Implementing the Red Book

• Know the Red Book
• Objective gap analysis
• Action Plan
• Commitment

22
Money Laundering

• Subtitle

Greg Marks
23
Money Laundering - Session content why bother
with Money Laundering?

• Money laundering headlines
• Money laundering context/content
• Money laundering examples/dvd
• Play DVD