Here you will find key terms related to economic forensics and economic crime — clearly explained.
quick navigation: A | B | C | … | Z
A
Anti-Money Laundering (AML)
Definition: Measures to prevent the integration of illicit funds into the legal economy.
Example: Mandatory reporting of suspicious transactions.
Impact: Essential component of compliance and control systems.
B
Balance Sheet Fraud
Definition: Manipulation of financial statements to mislead investors, regulators, or creditors.
Example: Concealing liabilities or inflating revenues.
Impact: Balance sheet fraud is a criminal offense and can result in severe penalties.
Bribery
Definition: Offering or accepting benefits to influence decisions.
Example: A supplier bribes a buyer to obtain contracts.
Impact: Bribery is a criminal act and a major compliance issue.
C
Compliance
Definition: Adherence to laws, internal policies, and ethical standards.
Example: Implementing anti-corruption guidelines and a code of conduct.
Impact: Core element of corporate crime prevention.
Conflicts of Interest
Definition: Situations where personal interests conflict with professional duties.
Example: A director awards contracts to their own side business.
Impact: Conflicts of interest undermine business integrity and decision-making.
D
Disgorgement
Definition: Legal requirement to surrender illegally obtained profits.
Example: A CEO must repay bribery-derived gains to the company.
Impact: A key remedy in financial crime cases to remove criminal incentives.
F
Fraud Triangle
Definition: Model explaining the conditions that enable occupational fraud: opportunity, motivation, and rationalization.
Example: An employee facing financial hardship (motivation), lacking oversight (opportunity), and justifying their actions (“Everyone does it”).
Impact: Widely used in fraud prevention and investigation.
False Claims
Definition: False or fraudulent claims against the government or third parties.
Example: Billing for non-existent services in healthcare.
Impact: False claims are illegal and subject to severe penalties and reputational damage.
W
Whistleblower Protection Law / Whistleblower Directive
Definition: Legal framework protecting individuals who report violations of law and internal company policies. In the EU, the Whistleblower Protection Directive (2019/1937) requires member states to implement national laws.
Example: An employee reports balance sheet fraud or corruption via internal reporting channels or to authorities.
Country-specific legal status:
- EU: EU Whistleblower Protection Directive (2019/1937), mandatory since December 2021.
- Germany: Hinweisgeberschutzgesetz (HinSchG), in force since July 2, 2023.
- Austria: HinweisgeberInnenschutzgesetz (HSchG), in force since February 25, 2023.
- Switzerland: No comprehensive whistleblower protection law. Partial protection through labour law (OR), data protection, and criminal law. No explicit legal requirement for internal reporting channels.
Impact: Whistleblower protection encourages the detection of economic crime and strengthens corporate compliance culture.