Fraud investigations in a technologically connected but physically distant world

July 2020  |  SPECIAL REPORT: WHITE-COLLAR CRIME

Financier Worldwide Magazine

July 2020 Issue

At the best of times, managing an investigation related to fraud and financial crime, sanctions or other regulatory issues is a complicated undertaking. Typically, such exercises are conducted under high levels of scrutiny, within short time frames, and with challenges regarding access to information. They may also need to be undertaken covertly while the business continues to operate, with minimal disruption to, or detection by, the broader company.

Despite prevailing current global conditions, the requirement for investigations has not declined. On the contrary, the need for such services is expected to increase as companies respond to challenges or seek to pursue outstanding debts in these financially challenging times. Yet, execution is seemingly hampered by limitations on human contact and physical interaction.

Therefore, we must consider how those conducting investigations are using technology to adapt and the implications of adaptations for investigations in the future.

Access to data

The COVID-19 pandemic has impacted data access. Physical access to public registries and data, as well as to corporate data that is paper based, remains a prerequisite in many parts of the world, something that has not been possible in recent months.

Jurisdictions that continue to be heavily reliant on paper filing systems and human-based controls will need to adapt swiftly as the cross-border nature of the legal and commercial world means that the dangers of getting ‘left behind’ are profound. Digitalisation and online access will accelerate in many regions. Governments and corporations should prepare for increased pressure to update manual processes and data to allow better transparency, use of data and more effective business management.

An increased reliance on digital information in recent years has had a corresponding impact upon the form of such investigations. The rise of social media, internet communication and ease of access to public data has, in some ways, made complex assignments more approachable. Data tends to be easier to identify, quicker to acquire and subject to more thorough analysis than ever before. Given the multiple data sources that can be accessed, information can be more readily cross-checked and verified. For example, an email trail relating to a corporate transaction can be compared with contractual documents, as well as payment records, for a more complete picture of events.

COVID-19 has required the migration of entire workforces to a working from home environment. This necessary response has created a surge in demand for IT devices in many organisations. Companies previously relying on desktop environments are struggling to source and deploy laptops at short notice. This condition sounds like a short-term­­­­ IT procurement issue, but we need to consider the impact of these changes on future investigations. Data will likely b­­­e saved to new locations and devices during the disruption. Those responsible for corporate data need to remain vigilant during this period and be prepared to answer enquiries in the future. Were personal devices and USB drives used as short-term stop gaps? What collaborative tools did the company suddenly adopt, who used them and for what purpose? Can the data be preserved and extracted easily?

Of course, investigations have been conducted remotely for some time. It is possible for complex forensics and analysis to continue despite physical access restrictions. Investigators continue to find the best ways of working despite the various restrictions, using existing technology-led solutions to collect data remotely and host the data securely while providing access globally.

A significant amount of work is conducted online and knowing where data sits in various repositories around the world has never been more crucial. Likewise, longstanding contracts in jurisdictions or industries where access to documents and information can be complex at any time, due to hard copy filing systems or complex language requirements, are now invaluable.

Empowering the investigations team with key technology and analytical techniques

Remote review and analysis of corporate communications and transactional data is nothing new. Investigators have leveraged this type of technology to index, search, categorise and report on the issues identified for many years. In many situations, statements and systems generate documents that can be analysed in bulk, not in document form but by accessing the underlying enterprise systems.

Digital data also permits more complex and accurate interrogation and analysis. Although it should not be regarded as a substitute for the expertise and insight provided by an experienced analytical team, complementary machine learning (ML) techniques, such as natural language processing (NLP) and predictive analytics, are now common tools that assist in certain investigations, particularly those that involve vast amounts of data. This is often the case with thematic regulatory issues. Whether automating bulk data interrogation with robotic process automation (RPA), using data visualisations to analyse aggregated disparate sources or building financial crime typology analytics models, leading data and technology capabilities are essential components of a modern-day investigative team. These approaches must not fall into the world of black box solutions, as methodologies must remain explainable to the relevant authorities.

Updating the investigation process

The human aspect of an investigation should not be overlooked. Good investigation is, at its heart, an analogue process; choosing which avenue to explore and using ingenuity to bring different datasets together for comprehensive analysis. Remote working and lack of immediate access to colleagues and teammates are a barrier. While we have discussed how access to available data and its subsequent analysis can, to some extent, be worked around in the current environment, perhaps the most important role of any investigation is that of the analyst, and the various processes undertaken through the course of a complex assignment. In what is, by necessity, an intensely creative environment, much can be lost through the medium of a planned, web-based discussion, even when the latest workflow and video tools are brought to bear.

Interviews of key staff and other individuals with insight into the matter at hand can shed important light on a complex matter. Well-informed sources have always been an important facet of any complex investigation, and while finding these individuals may now be more straightforward, the importance of human contact and interpersonal skills must never be disregarded. While interviews can be conducted effectively through video conferencing, it can be difficult to effectively refer to documents and to fully gauge the reactions of the interviewee, which can be critical during the interview process.

Meanwhile, whistleblowers and key witnesses need to be afforded the confidentiality and due processes concerning protecting the rights of the individual that are so important for their own wellbeing and the validity of their testimony at a later stage. As such, we must adapt our processes to ensure that the way in which we interview remotely and memorialise testimony and witness interviews is in accordance with evidential standards that will be expected, and which may be relied upon later in the process. Where expert witness testimony is required during the legal process, we initially saw cases being delayed, but are now being called to testify remotely, as well as being proactively engaged in helping shape these new processes and standards. Companies will need to ensure that relevant procedures are updated to manage these changes in operations.

When will I see you again?

Is this the end of all in-person aspects of investigations? Such revisions to processes are not a long-term substitute. While video conferencing and similar facilities continue to improve at pace, there is no substitute for face-to-face interaction and the myriad benefits of such to all parties. Once the social and professional environments permit, we will certainly see a return to direct physical interaction. That said, it would not be surprising if the forced change in behaviours through most of 2020 have served to upskill and add confidence to a more online environment.

Jacqui Record and Robert Capper are senior managing directors and Richard Chalk is a managing director at Ankura. Ms Record can be contacted on +971 (0) 4 381 9038 or by email: jacqui.record@ankura.com. Mr Capper can be contacted on +44 (0)20 7469 1111 or by email: robert.capper@ankura.com. Mr Chalk can be contacted on +44 (0)20 7015 8756 or by email: richard.chalk@ankura.com.

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BY

Jacqui Record, Robert Capper and Richard Chalk

Ankura

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