Preventing fraud -_jm_kadaner

WHAT TRAVEL PAYMENT IS ALL ABOUT.
P. 1
Dateiname / Datum
Preventing Fraud in a Managed Travel Programme
Internal, External and Technological…… 7th October 2014, Inner Temple Hall, London
JM Kadaner , Partner AREKA CONSULTING and CEO Key Corporate Solutions

AIRPLUS. WHAT TRAVEL PAYMENT IS ALL ABOUT.
P. 2
AirPlus Annual Client Event 2014
Summary
What is fraud, an overview
Most common fraud in T&E and MICE
How does the payment industry react? With what measures?
How to identify and prevent?
New technologies = new risks?
Does P-to-P and End-to-End processes help detecting fraud?
Some key measures you should undertake to limit the risks…Forensic analysis..
Conclusion
Program of the show..

P. 3
Legal Redux
Note 1 : All trademarks, service marks, collective marks, design rights, personality rights, copyrights, registered names, mottos, logos, avatars, insignias and marks used or cited in this presentation are the property of their respective owners and this presentation in no way accepts any responsibility for an infringement on one of the above.
Note 2 : By reading, or hearing, any member of the audience provide its consents that s/he is familiar with, understands and absolutely accepts the above disclaimer and renounce any litigations against the author who is excessively paranoid about being dragged into court….
Note 3 : The information provided on this presentation is of a general, broad, sweeping, large, wide- ranging, wide-reaching and wide-spread nature and cannot substitute for the advice of a licensed professional. A competent authority with specialized knowledge is the only one who can address the specific circumstances of your problems. We can try, but this disclaimer frees us of any liability if negative consequences result from our efforts.
Requisite..

P. 4
Dateiname / Datum
Price list published on the “Shadow” internet…
Do not forget, it’s also a Business..
Courtesy : Symantec

P. 5
Some facts to begin with…
Total global payment-card fraud losses were >$12.3 billion in 2013, up nearly 15% from the prior year…and it continues…..on average it costs the industries 0,07 BPS (source: Nilson Report)
According to a recent Association of Certified Fraud Examiners survey, employees residing in the "executive/upper management" department of an organization also account for 27% of expense reimbursement fraud cases…..
According to the Association of Certified Fraud Examiners’ (ACFE) most recent Report to the Nations on Occupational Fraud and Abuse, T&E frauds alone account for 14.5% of all frauds uncovered….
30% of adults in the U.K. viewed exaggerating expense claims as acceptable and 20% admitted to having done so themselves..Source Globalexpense…and so on…
What is fraud, an overview

P. 6
Potential causes…
"People feel bitter when they feel like they're not being well compensated or they're being overworked,"
"When you have a downturn in the economy, you tend to see more fraudulent use of company credit cards,"
" Human nature is vain..if you have 5 % of the population in prison…it’s only the visible part of the iceberg…. There's no way to examine how much fraud is actually out there “ Said a Forensic Expert..
More seriously the reasons are :
1.Lack of security
2.Lack of rules
3.Lack of controls

P. 7
Big Fraudsters…
Charles Ponzi
(March 3, 1882 – January 18, 1949) was an Italian swindler, who is considered one of the greatest swindlers in American history…..
Bernie Madoff
(Born April 29, 1938) is a former stock broker, investment adviser, non-executive chairman of the NASDAQ stock market, and the admitted operator of what has been described as the largest Ponzi scheme in history.
You and….Me
(Born anytime) that could, given particular circumstances, become one…l’occasion fait le laron……in particular when comes the Tax Declaration Exercise… 

P. 8
Some well-known examples.. fictitious expenses
Charging for items used for personal reasons (gas, groceries, hotels, etc.)
Billing for travel and expenses that never materialized (canceled airline tickets, seminar or convention registration fees, tuition reimbursement and professional dues payments)
Seeking reimbursement for items that were never purchased (office supplies, gifts for clients, fuel)
Collusion among employees who both bill separately for travel or mileage reimbursement when they traveled together
Outright falsifying or manipulating receipts
Falsified invoices…and not delivered services/goods
Etc.
Most common fraud in the T&E and MICE

P. 9
Some well-known examples…Inflating business expenses
Claim meals and entertainment reimbursement that may be in excess of allowed per diems or items not reimbursable under your policy (alcohol, leisure activities, sports tickets).
Add tips to reimbursement when tips were already included.
Add tips to their reimbursement copies that were greater than what was actually left.
Fly first class or use limousines when modest means may be available and more applicable….see travel policies…
Use inflated mileage totals when seeking reimbursement for auto travel.
Etc..

P. 10
Some external Treats…
Stolen cards..as you may not know its stolen…
Skimming in other words taking a copy of your card (ATM’s and teller machines..)
Identity theft
1.Application fraud, issuing a card under your name,Company
2.Account takeover, what it says..
Tele phishing..lots of example in the press lately..real Pro’s
Fraudulent charge-back schemes
Unexpected repeat billing
NFC Signal & data Capture

P. 11
Counter measures…a Lot of them
Cardholder liability according to issuers local Laws and Insurances schemes
Merchant certifications PCI DSS (Payment Card Industry Data Security Standard) and rules
Fraud detection and prevention software, analyses spend patterns
Strong Authentication measures (3D Secure) such as:
Multi-factor Authentication, verifying that the account is being accessed by the cardholder through requirement of additional information such as account number, PIN, ZIP, challenge questions
Multi possession-factor authentication, verifying that the account is being accessed by the cardholder through requirement of additional personal devices such as smart watch, smart phone Challenge-response authentication
Out-of-band Authentication, verifying that the transaction is being done by the cardholder through a "known" or "trusted" communication channel such as text message, phone call, or security token device
How does the payment industry reacts ? With what measures ?

Source: Mobile Money Market: Key Market Drivers & Restraints (2010-2015)
Lack of regulation on mobile transactions
Quality of service
Lack of collaboration between players
High cost of solution
Better user awareness
Ease of payment
Secure network
Interoperability across networks and platforms
Efficiency and speed of mobile networks
Drivers
Restraints
Security will remain a key inhibitor
Security concerns

P. 13
Mobile application security examples

P. 14
Some key words and methods..building blocks
How to identify and prevent ?
Anti Fraud Policies
& Procedures
Fraud Vulnerability
Reviews
Fraud Awareness
Training
Fraud Risk
Assessment
Whistle Blower /
‘Report a Fraud’
Proactive Fraud Prevention & Detection
Post Event Analysis (eg : Mice)
Reviews &
Investigations
Data Mining &
Analysis

P. 15
Some key words and methods..Policies
IT Security Policy
Outsourcing Policy
Travel & Mobility Policy & T&E Guidelines
MICE Policy
Fleet Policy
Employee Code of Conduct
Whistle Blower Policy
Fraud Policy
1.Responsibility of senior management
2.Staff accountability for frauds

P. 16
Some key words and methods..Some tips
Require original documentation (No receipt=>No Pay)
Initiate a formal review process (Managers validation)
Routinely question expenditures (Do not be afraid to ask )
Have all disbursements made in a formal manner (Uniform payment, no cash)
Treat reimbursement activities consistently (Do not allow delays)
 Receive credit activity reports on a monthly basis (And follow-up)
 Implement the use of corporate charge cards (Obvious is not it ?)
Automate the processes as far as possible (Fewer manual ops,fewer errors) The Technology is there today
Annually audit a sample of employees’ expense reports (Forensic Approach)
Prosecute offenders (Not Often done.. )

P. 17
The right question should be..more Technology more risks
Smartphones and Tablets
Social Media and open environments
BYOD..(Bring your Own Device) and related Management (Or lack of)
Door to Door and End to End
Open booking and internet security
Alternative Travel Behaviour (AIR BNB,UBER,Other Similar services)
Virtual payment alternatives
Mobility Management
Etc…
New technologies = New risks ?

P. 18
What do you think ? Raise your hands for Yes, Raise your hands for No ?
These systems (tools) alone, no
Cards (in all shape and forms) or ACH (Automated Clearing house) a must
1.To secure the operations and transaction
2.To trace the activities through identified and clear workflows
3.To facilitate documentation and reconciliations
4.To build up your data cube and allocate the costs
5.To perform analysis and reveal the extremes
6.To protect your company
It’s an investment but it pays off…data is king !
Does P-to-P and End-to-End processes Help detecting fraud ?

P. 19
Dateiname / Datum
Article in Brief :
160000 travellers audited
6,3 % “out of compliance”..
19 % fraudulent..
5 % of employees committed 82 % of the fraud
Tools :
68 % used Concur
10 % used Oracle & SAP
6 % used IBM GERS
Fresh from the press (nearly) BTN September 30th

P. 20
It is important to control the complete process consistently
Some key measures you should undertake to limit the risks…Forensic analysis..

P. 21
Some of them..
Travel organization : Acte,GBTA,AFTM,BATM,VDR
Press : Btn, The Beat, Travel Procurement,Tnooz
Card industry professional's, Payment industry professional’s, Nilson, ACFE, PWC, Communications Fraud Control Association..
 and more
A Great Thank You !
Sources

P. 22
Some quotes..
“Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.” Warren Buffett
An alternative is ‘’ Death is the solution to all problems, no Man, no problems ‘’ Joseph Stalin
Let’s be all happy, to have so many still to resolve…..
Conclusion

P. 23
Thank You Very Much ! We have answers, we have answers… Do you have any questions ?

Preventing fraud -_jm_kadaner

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