Employee fraud can occur with every business, regardless of the size of the company, the countries where it operates, or the industry they are in.  No one is immune.  But there certainly are places and industries where the risks are greater. Russia has been recognized as a high risk country for fraud, therefore background checks and due diligence in Russia should not be avoided.

Russian private investigators say that traditional types of fraud like the ones caused by employees has not diminished over the years. New and increasingly growing threats like cyber-attacks have diverted the attention of many security experts within the companies, and although it continues to be extremely important to assess these emerging risks, it is also important to keep an eye on the crimes we have all known for a long time.   In Russia, it takes a trained professional in Moscow to properly verify the facts and obtain the evidence you need.  Don’t try to verify from abroad, or recklessly try to do your own homework on the internet.  Not to mention, you had better speak the language!

Companies lose every year a lot of money due to employee fraud. If they are lucky, the losses will be limited to a few thousand dollars, but if they are unlucky, it can lead to bankruptcy.

Employee fraud is generally described in these categories:

• Asset misappropriation
• Fraudulent accounting and reporting
• Corruption or embezzlement
• False backgrounds

In the past recent years we have witnessed small and big companies who have had to face court rulings due to the actions of one employee only, but one who represented the whole company.

One important thing to acknowledge is that most of the fraud is committed by the trusted employees, who had the responsibility and the authority to do something that could divert money into their own pockets. It has it´s logic: the people you don’t trust are never given the opportunity to steal from you. Many organizations have perfectly well strategies and protocols to avoid hiring people who have a past of fraud or unethical practices. And screening new employees in or from Russia is a great idea. But they also forget that verifying things continue to run normally is just as important!

Companies from the U.S. may have a better understanding of why conducting periodical employee background checks and due diligence is important. The FCPA regulations are very strict, and not complying can deeply harm them. Other developed countries have their own regulations and policies, and have been reinforcing the culture of risk management and compliance. However there is still a long road to go, we may never get rid of employee fraud –or any other type of crime.  But, prevention is the key to lowering the chances that your business will ever be in this spot.

The consequences of employee fraud are serious for different reasons. The most immediate of them all is financial. It´s not only about the money lost to the fraudster, in other cases there may be fines, business deals that will be cancelled and other financial implications. But besides this, if the employer fails to take immediate action against the fraud, it could spread like cancer in the organization and affect the staff morale. Good employees do not want to work for a business where fraud is widespread. And finally the reputation of the business in the eyes of suppliers, customers, competitors, and other business partners can be damaged.  Be smart and verify correctly the first time.

Are you considering doing business or hiring someone from Russia?  Get the facts and get clear evidence.  Get a free quote today about how to properly lower your risk!

C. Wright
© 2015 Russia PI™

© Copyright 2015 Russia PI.  All Rights Reserved.  This content is the property of Russia PI, LLC and is protected by United States of America and international copyright laws.