How can digital forensics help fight financial crime?

Digital forensics can help to cope with the “dependence” on the tracking of electronic and hand-written documents by hand, which makes it impossible to conduct a large-scale investigation. How exactly?

Technologies play an increasingly important role in identifying fraud in organizations and in reducing the costs associated with compliance with financial crime requirements and conducting investigations.

Digital forensics comes to the fore, as financial market regulators, its participants and investors are focused on preventing or countering commercial fraud in the digital age.

In the old paper world, evidence was usually collected on the basis of interrogations and document analysis.

One of the stages of forensic examination is the search for counterfeit signatures or falsified records in the archives of documents, for example, in contracts with contractors, invoices, etc.

The process of gathering evidence, requiring a large group of investigators, was also often long and tedious. It’s like finding a needle in a haystack .

With the growth of technology, the role of digital methods of financial crime disclosure has also increased.

Greater accuracy

Since in recent years most of the financial documentation has been gradually translated into digital formats, accounting reporting is increasingly being recorded more accurately and with greater detail. Data can also be “on the move”, that is, as messages on personal devices, in instant messenger applications or even in the cloud.

Where technology is, there’s crime. Now, alas, digital fraud is on the rise in the format of cyber and phishing attacks, penetration into the corporate system through viruses.

In an international study published in 2017, KPMG emphasizes that when fraudsters use technology, about 24% of them create fake invoices or falsify accounting data, and 13% – violate the rights of access to computer systems. About 20% is associated with fraud in social networks and instant messengers, throwing in fake information.

In order for expertise to be effective today, it is necessary to quickly store and use digital data bases using advanced technologies and techniques.

Digital expertise

Digital expertise today plays a very important role in the investigation of fraud. This is due to the increased opportunities for forensic science, and the increase in computer capacity, and the evolution of storage technologies.

Today it has become easier to collect data from a variety of devices: computers, smartphones, tablets, servers, including cloud, as well as various media: external hard drives, flash drives and CDs.

The transition to digitalization also facilitates the wider use of electronic detection tools for more efficient analysis of digital data.

For example, in accordance with the industry standard of electronic investigation (EDRM), such tools are used to help companies properly handle the collection, processing, analysis and placement of information stored electronically (ESI).

Special tools can convert document images to digital files so that data searches are faster, and more importantly, more efficient. These tools can also remove duplicate information, and also allow several specialists to work in parallel. Another plus is the ability to work remotely with documents, and accordingly, international cooperation between investigators, lawyers and regulators, which can simultaneously consider digital evidence on a common platform.

More electronic data – more opportunities for data analysis by forensic scientists.

With the development of the capabilities of artificial intelligence and machine learning, experts can use data analysis techniques to identify potential anomalies or the presumed effect of a “smoking gun” in a huge array of electronic information.

Digital expertise can help to cope with the “dependence” on the tracking of electronic and hand-written documents by hand, which makes it impossible to conduct a large-scale investigation.

Be on the alert

What should companies do to protect themselves?

Scammers become more intelligent and inventive, because they have access to advanced technologies.

In the forecast of the general director of KPMG for 2018, cyber security was identified as a priority topic. Only a third of companies believe that they are able to repel a cyber attack.

Thus, companies should improve the management of financial crime risks in a digital format to prevent, detect and respond to financial crimes.

What should be in the arsenal of companies?

  • Introduction of technologies for detection of risks associated with corporate communications: with agents, distributors, employees and suppliers.
  • Conducting periodic forensic examination of data on the past accounting report, as well as operational data to identify weaknesses, as well as signs of potential fraud.
  • Implementing continuous monitoring technologies to quickly identify weaknesses or signs of potential fraud.
  • Preventive work to prevent cyberthreats in corporate systems.

To effectively reduce the risks of financial crimes, companies also need to change the management and conduct of digital financial crime expertise. With proper use of technology, they can significantly improve efficiency and at the same time reduce the costs associated with meeting the requirements for preventing financial crime threats and conducting investigations.

The article was translated by the staff of the editorial staff of the Institute of Forensic Expertise and Criminalistics.

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