Abbas Bou Diab, Executive Manager and Head of Compliance and Anti-Money Laundering at BLOM Bank Qatar
It is crucial for banks to have effective anti-fraud programs in place, especially since the banking and financial services sector has been identified in one study with the greatest number of reported fraud cases among other industries globally, an official from BLOM Bank Qatar has said yesterday.
Speaking on the second day of the Combating Fraud & Forgery in Banking Industry workshop organized by the Qatar Central Bank and Union of Arab Banks here, Abbas Bou Diab, Executive Manager and Head of Compliance and Anti-Money Laundering at BLOM Bank Qatar, said that banks should have written anti-fraud policies approved by the company’s Board of Directors. The policies also need to be communicated to all the staffs to prevent fraud; while well-documented internal systems can lead to detection of fraudulent activities, Diab added.
In his presentation, Diab also said that fraud schemes usually involve third party transactions as well as false vendors or false employees which could lead to over inflated invoices. He also said bank organisations need to ensure that there is no conflict of interest among their staffs.
Talking to The Peninsula on the sidelines of the event, Diab also said, “There should be segregation of duties in the organisations to ensure that there’s no conflict of interest among the staffs. If you’re an accountant, you should not be at the same time an internal auditor. Because you are reviewing what you are doing. So this will create conflict of interest”.
According to the 2018 Global Study on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners (ACFE), which was also presented during the workshop, the greatest number of fraud cases investigated by the association occurred in the banking and financial services sector.
Globally, financial statement fraud schemes (10 percent of the cases) were the least common but most costly with a median loss of $800,000 to the victim organisations. Financial statement fraud happens when an employee records fictitious revenues, understates reported expenses, or artificially inflates reported assets.
Meanwhile, asset misappropriation schemes (89 percent of cases) were found to be the most common but least costly with a median loss of $114,000. Asset misappropriation involved theft of company cash, false billing schemes, or inflated expense reports.
Diab also said, “Fraud is less likely to happen when the firm employs highly competent individuals in financial reporting oversight roles. It’s also important that an individual’s level of authority is commensurate with his or her level of responsibility. A misalignment between authority and responsibility, particularly in the absence of control activities, can lead to fraud. Also, the sophistication of the firm’s Human Resources function can play an important role in fraud prevention. Background checks also should be performed for existing employees who are candidates for promotion to officer status or to a position in which they will handle or have access to company assets”.
BLOM Bank Qatar is a subsidiary of BLOM Bank, which is one of Lebanon’s leading banks. Recently, the bank has won the Excellence in Risk Management Award by Visa for its zero liability policy towards clients in case of card theft or data theft.
Diab said, “We have no tolerance to any fraud or forgery within the bank. We have the code of conduct and ethics, the whistleblowing policy, as well as the anti-fraud policy.
Risks exist in any organisation. But if you have effective internal control measures to prevent and detect fraud; then this will minimise the risks to happen within the organisation,” he added.
Talal Subah Al Abdulla, Head of Compliance & Special Tasks Section at the General Comptroller Department of the Qatar Central Bank (QCB), also said, “We at QCB provide the financial sector the best practices to increase their knowledge on how they can protect their organisations from fraud operations. We conduct such workshops to generate fraud awareness and establish with them the different rules and regulations to further improve the financial sector in Qatar”.
The three-day workshop which will conclude today will also discuss fraud detection and anti-fraud controls, forensic auditing and fraud investigation, as well as case studies of fraud schemes.
