The Sobering Facts About Employee Fraud

One of the topics I frequently return to is the risk assessment aspect of a recruiter's job, or the 'defensive' recruitment skills, such as background and reference checking, that are a necessary part of doing a complete job as a recruiter. Unfortunately, there is still an undesirable tendency for these skills to be deemed an 'admin' part of a recruiter's job. 

So it was with great interest that I read a recent news report generated by the release of research into employee fraud in financial institutions in the period since January 2000. 

Here's what the report revealed: 

Total amount of money fraudulently obtained by   employees

$217.3 million

Number of individual cases

120 (53% male, 47% female)

Number of these individual cases that were at one        of the 'Big 4' banks



Largest individual fraud (which primarily funded expensive pearls, houses and Michael Jackson paraphernalia)


$45 million

20 years plus service of employee to defrauded employer

1/3rd of cases

10 - 20 years service of employee to defrauded employer

1/3rd of cases

Ten year age range most common in employee

30-39 years (41% of cases)

Previous convictions for fraud amongst 123 individuals

5 people


Most common motivation for fraud

Gambling (52% of cases)

Second most common motivation for fraud

Improve lifestyle (29% of cases)

Most common way the fraud was executed

Money stolen from customers' bank accounts or term  deposits (34% of cases)


Longest period of undetected fraud

16 years


The report also revealed that one of the 120 cases involved an employee that was hired without any background check which, had it been undertaken, would have revealed this man's three (!) previous gambling related convictions for fraud. 

The report identifies the four biggest areas of risk in motivating or enabling fraud: 

  1. gambling addiction
  2. ignoring company policies
  3. lack of supervision in their role
  4. reactivating the accounts of former employees
  5. logging into the system under another employee's name 

Recruiters would do well to absorb these statistics (remembering the report only reported on fraud within the financial services sector) and remember that a candidate is not obligated to volunteer information about a conviction for fraud (or any other conviction for that matter). It is essential that recruiter and hiring managers have appropriate questions in their screening of candidates as well as a rigourous background checking process. 

A recruiter should be professionally skeptical at all times. Assume nothing. Ask and check.

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