Businesses hire top-level executives with the aim to expand, grow and inspire all levels of employees within the organization. These senior executives set the tone for the organization, establish formal and unwritten rules, and are responsible for aligning the company culture, standards and ethics.
World has witnessed many executive frauds across various industries, but in the recent past, BFSI sector has seen numerous executive frauds. Top management of any organization has access to innermost “secrets,” tools and resources that include handling and transmission of sensitive financial data, potentially carrying a high risk of C-suite fraud.
High profile BFSI frauds
Some high profile executive frauds in the BFSI sector have been making headlines recently. A state-owned bank which was subject to the biggest fraud in India amounting to $1.8 billion disclosed the detection of unauthorized transactions linked to a jeweler and designer. The transactions date back to 2011 when a Mumbai based bank manager issued a fraudulent letter of undertaking (LoU) to the jewellery firm. In May of 2018, three senior executives of this state-owned bank were charge-sheeted by the Central Bureau of Investigation (CBI) for their involvement in the Rs 65-billion jewellery company fraud. While one of the accused was the Chief Executive Officer and Managing Director, the other two were executive directors on the board.
In 2013 as well, 13 banks led by a major international bank were subject to Rs. 6800 crore fraud by a top diamond house based in Mumbai. Indian banks issued a standby letter of credit (SBLC) which are similar to the LoU to the diamond house to import bullion from international banks which were then allegedly used for arbitrage deals and financial speculations.
AuthLead™ to prevent executive fraud
The U.S. based Association of Certified Fraud Examiners (ACFE), found in a study that there is a “strong correlation” between the authority level of fraudsters and its financial impact. When executives commit fraud, the financial impact is said to be five times as much as those committed by junior or mid-level managers. Apart from the financial impact, the company suffers damage in terms of brand reputation, loss of trust and business interruption, all of which impact its standing in a major way.
AuthLead™ is a unique service offered by AuthBridge that involves comprehensive C-suite employees screening and CEO verification. Being a 360-degree exhaustive check, AuthLead™ gathers microscopic details from exhaustive reference checks, media and web scanning, industry perceptions and advanced professional reference and database checks.
Given that at least 37 percent of senior and mid-level executives are involved in financial fraud in India, C-suite employee screening with AuthLead™ is the right investment in the right direction for businesses in the BFSI sector.