Document management to catch a thief

If fraud is on the increase, is it time for the channel to provide a solution?

Document management apps vendor Version One has urged the public sector to implement electronic document imaging and cheque printing technology to combat what the vendor believes is a rising incidence of fraud.

PricewaterhouseCoopers (PwC) recently polled 110 senior representatives of government and state-owned enterprises, finding that about half of them had been affected by fraud in the last 12 months - with about half of detected instances of such economic crime among those surveyed indicating that the attacks had come from inside their organisation. This appears slightly higher than the last similar PwC quiz, which was in 2009.

Julian Buck, managing director of Version One, said that he believed the small PwC poll was a worrying indication. In his opinion, many employees may have financial worries in current tough times and as a result be seeking some kind of quick fix.

What happens then in the event of disgruntlement or an organisation simply putting the opportunity in front of them? Some staff, despite the most rigorous employee vetting procedures and HR, may be less able to resist temptation. However, effective document retention policies and document management systems can frustrate fraud attempts, he noted.

"It is always going to be a challenge to prevent any unscrupulous employees from committing fraud, if they have their minds set on it. However, organisations can implement measures and systems to help protect themselves," Buck said.

Buck pointed to secure cheque printing technologies, the use of special fraud-resistant stationery, the like. Companies can ensure that no bank or cheque details are pre-printed and that such details are only altered by those authorised to do so.

Stationery can be numbered, which makes it easier to trace. Electronic document management (EDM) systems can be integrated into accounting, ERP and HR systems, enabling copies of invoices, purchase orders and personnel records to be made and then securely archived, said Buck.

PwC's poll is very small. However, other organisations have also recently published figures on fraud. Some types of fraud appear actually to be on the decrease - card, cheque and online banking fraud, for example.

According to figures released by financial services industry lobby group Financial Fraud Action UK in March, card fraud losses are at their lowest since 2000. A total of 365.4 million was defrauded in 2010 via card, cheque and card-not-present versions of the crime such as ID theft, account take-over, online or phone banking fraud - a fall year on year of 17 per cent, and down from an all-time recorded high of £610 million in 2008.

The year before had already seen a drop of 28 per cent. Newer banking industry initiatives - including chip-and-PIN technology and the likes of Verified by Visa -- appear to be successfully keeping fraudsters away from customer cards and bank accounts despite a continuing rise in attempts to phish customer details online.

Fraud costs £38bn a year
That said, 2011 figures from the National Fraud Authority claim that fraud costs the UK at least £38 billion a year - which means that card and banking fraud accounts for just one per cent of the total frauds committed.

KPMG's fraud barometer says that total UK fraud rose to 314 cases, worth £1.37 billion. That's the amount attributed to what it calls "serious cases" of fraud that involve sums of more than £100,000 and have gone to court in the UK.

According to Richard Abraham, product manager at Version One [pictured, below right], much fraud can and does involve misuse of company documents. While chip-and-PIN technology does appear to have reduced the ease of carrying out some types of bank-related fraud, many organisations have not yet deployed much technology that may protect them against other types of fraud.

"The obvious thing is to use document management around the finance function," Abraham said. "The primary thing is to try address somebody trying to create false transactions on the systems."

He said that software that helps create a document archive that sits on the systems that generate cheques and purchase orders can go a long way to deterring fraudsters. And they can make it easier to catch them, if they do breach the defences. E-fingerprinting and e-signatures are part of what is generally a multi-pronged approach.

"An example is a customer who had two cheques printed out, and they did pick it up later on and there was a prosecution, but if they had had a secure cheque printing solution they could have prevented it," Abraham said. "They could have saved the time and money wasted in chasing it back up and the criminal process, et cetera."

He said that document management systems can enable an organisation to track and trace a document at any point in its moves around the organisation, when it left the company and who sent it. It eases the process of creating audit trails so it is clear who approved what and when. E-fingerprinting can enable the logging of activity relating to that document.

Meanwhile, many companies must still make payments by cheque, Abraham noted. Laser printers that incorporate additional security features can prevent cheques from being printed out without authorisation. Also special toners exist that can help protect against cheque alteration, he said.

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