A
Access Rights Abuse
DEFINITION
Misuse of authorized system access.
MEANING
Common driver of internal fraud cases.
EXAMPLE
Administrator exploits privileges.
Account Takeover
DEFINITION
Unauthorized access to user accounts.
MEANING
High risk for privileged accounts.
EXAMPLE
Email account hijacked after phishing.
Anti-Money Laundering (AML)
DEFINITION
Legal and organizational measures to prevent money laundering and terrorist financing.
MEANING
Core compliance obligation across industries.
EXAMPLE
Requirement to identify beneficial owners.
Asset Misappropriation
DEFINITION
Asset misappropriation involves the theft or misuse of an organization’s assets by individuals in a position of trust.
MEANING
Although usually involving smaller amounts per incident, cumulative losses can be substantial.
EXAMPLE
Unauthorized personal expenses charged to a company credit card.
Audit Trail
DEFINITION
Traceable record of transactions and changes.
MEANING
Essential for audits and investigations.
EXAMPLE
Logged changes in accounting entries.
Average Fraud Duration
DEFINITION
Time between fraud initiation and detection.
MEANING
Shorter duration indicates effective detection.
EXAMPLE
Fraud detected after 14 months.
B
Beneficial Owner
DEFINITION
The individual who ultimately owns or controls an entity.
MEANING
Transparency is essential for anti-money laundering (AML) and fraud prevention.
EXAMPLE
A vendor is effectively controlled by one individual.
Bid Rigging
DEFINITION
Bid rigging involves collusion between bidders to manipulate tender outcomes.
MEANING
It undermines fair competition and procurement integrity.
EXAMPLE
Companies rotate winning bids in public tenders.
SOURCES
Bribery
DEFINITION
Bribery involves offering, giving, or receiving something of value to influence an official or business decision.
MEANING
It is prohibited under most national and international anti-corruption laws.
EXAMPLE
Payments to public officials to secure licenses.
SOURCES
Bribery of Private Officials
DEFINITION
Bribery between private sector parties.
MEANING
Illegal in many jurisdictions.
EXAMPLE
Kickback for supplier selection.
SOURCES
Bribery of Public Officials
DEFINITION
Offering benefits to public officials to influence actions.
MEANING
High legal and compliance risk.
EXAMPLE
Payment to speed up licensing.
SOURCES
Business Email Compromise
DEFINITION
A scheme where business emails are compromised or spoofed.
MEANING
Exploits trust and weak processes.
EXAMPLE
Spoofed CEO email requests urgent payment.
C
Cash Larceny
DEFINITION
The theft of cash after it has been recorded in the accounting system.
MEANING
Typically requires direct access to cash and weak controls.
EXAMPLE
Cash is stolen from the register after closing.
Chain of Custody
DEFINITION
Documented handling of evidence.
MEANING
Prevents tampering claims.
EXAMPLE
Logged handover of storage media.
Channel Stuffing
DEFINITION
Pushing excess inventory to distributors.
MEANING
Shifts risk downstream.
EXAMPLE
Forced end-of-quarter shipments.
Check Tampering
DEFINITION
The misuse or alteration of checks.
MEANING
Common in manual payment environments.
EXAMPLE
A check is issued to an unauthorized payee.
Collusion
DEFINITION
Cooperation between parties to commit fraud.
MEANING
Undermines traditional controls.
EXAMPLE
Buyer and vendor coordinate fake invoices.
Compliance Breach Frequency
DEFINITION
Number of compliance violations.
MEANING
Early governance warning.
EXAMPLE
Multiple sanctions breaches.
Compliance Violation
DEFINITION
Failure to comply with laws, regulations, or internal policies.
MEANING
May result in penalties and reputational damage.
EXAMPLE
Ignoring sanctions requirements.
Conflict of Interest
DEFINITION
A conflict of interest arises when personal interests interfere with professional responsibilities.
MEANING
Undisclosed conflicts increase fraud and compliance risks.
EXAMPLE
Awarding contracts to a company owned by a family member.
Conflict-Based Corruption
DEFINITION
Corruption driven by undisclosed conflicts of interest.
MEANING
Hard to detect without disclosure.
EXAMPLE
Awarding contracts to own business.
Control Effectiveness Rate
DEFINITION
Percentage of controls operating effectively.
MEANING
Measures internal control quality.
EXAMPLE
85 percent effective controls.
Control Failure Rate
DEFINITION
Percentage of failed controls.
MEANING
Indicates fraud exposure.
EXAMPLE
Multiple failed dual controls.
Control Override Red Flag
DEFINITION
Frequent bypassing of controls.
MEANING
Signals abuse of authority.
EXAMPLE
Repeated manual overrides.
Corporate Criminal Liability
DEFINITION
Criminal liability of corporations.
MEANING
Drives compliance investment.
EXAMPLE
Company liable for control failures.
Corruption
DEFINITION
Corruption is the abuse of entrusted power or authority for private gain.
MEANING
It undermines fair competition, distorts decision-making, and poses significant compliance risks.
EXAMPLE
Awarding contracts in exchange for personal benefits.
SOURCES
Cost of Fraud Management
DEFINITION
Total cost of fraud management.
MEANING
Supports cost-benefit analysis.
EXAMPLE
Budget for analytics and training.
Customer Due Diligence (CDD)
DEFINITION
Risk-based assessment of customers and relationships.
MEANING
Ensures proportionate controls.
EXAMPLE
Enhanced checks for high-risk clients.
Cyber Fraud
DEFINITION
Cyber fraud involves fraud schemes executed through digital technologies.
MEANING
It represents a rapidly growing risk area.
EXAMPLE
Phishing attacks to steal credentials.
SOURCES
D
Data Analytics Detection
DEFINITION
Use of data analysis to detect anomalies.
MEANING
Enables continuous monitoring.
EXAMPLE
Duplicate vendor analysis.
Data Analytics for Fraud Detection
DEFINITION
Use of data to identify fraud patterns.
MEANING
Enables full-population testing.
EXAMPLE
Matching vendor and employee data.
Data Manipulation
DEFINITION
Intentional alteration of data to mislead.
MEANING
Compromises decision-making and controls.
EXAMPLE
Altering accounting entries in ERP systems.
Data Protection Law
DEFINITION
Legal framework for personal data protection.
MEANING
Impacts investigations and monitoring.
EXAMPLE
Limits on employee monitoring.
Deferred Prosecution Agreement (DPA)
DEFINITION
Agreement to defer prosecution under conditions.
MEANING
Common in US enforcement.
EXAMPLE
Fines and compliance obligations imposed.
Detection Source Ratio
DEFINITION
Distribution of fraud detection sources.
MEANING
Indicates most effective detection channels.
EXAMPLE
60 percent detected via tips.
Documentation Issues Red Flag
DEFINITION
Incomplete or altered documentation.
MEANING
Obstructs audit trails.
EXAMPLE
Missing delivery evidence.
Duplicate Payments Red Flag
DEFINITION
Multiple payments for the same invoice.
MEANING
Indicates weak controls.
EXAMPLE
Invoice paid twice.
E
Economic Extortion
DEFINITION
Obtaining benefits through threats or coercion.
MEANING
Can involve internal or external actors.
EXAMPLE
Threatening delays unless paid.
Employee Complaints Red Flag
DEFINITION
Employee complaints.
MEANING
Early warning signs.
EXAMPLE
Complaints about procurement favoritism.
Enhanced Due Diligence (EDD)
DEFINITION
Enhanced checks for higher-risk customers.
MEANING
Mandatory for elevated risk cases.
EXAMPLE
Additional source-of-funds verification.
EU Whistleblower Directive
DEFINITION
EU-wide whistleblower protection framework.
MEANING
Mandatory reporting channels.
EXAMPLE
Internal reporting hotline.
Expense Account Fraud
DEFINITION
The submission of false or inflated expense claims.
MEANING
Often small per incident but cumulative.
EXAMPLE
Personal meals claimed as business expenses.
Expense Manipulation
DEFINITION
Improper capitalization or deferral of expenses.
MEANING
Used to manipulate earnings.
EXAMPLE
Expenses deferred to future periods.
Expense Reimbursement Fraud
DEFINITION
Improper expense reimbursement claims.
MEANING
Often small but frequent.
EXAMPLE
Duplicate or altered receipts.
Export Control Compliance
DEFINITION
Compliance with export control regulations.
MEANING
Prevents illegal technology transfers.
EXAMPLE
License required for software export.
External Audit Detection
DEFINITION
Fraud identified by external auditors.
MEANING
Focuses on financial reporting.
EXAMPLE
Audit flags material misstatements.
F
False Invoice Scheme
DEFINITION
Invoices for goods or services not provided.
MEANING
Often linked to collusion.
EXAMPLE
Invoice without proof of delivery.
Financial Statement Fraud
DEFINITION
Financial statement fraud involves intentional manipulation of financial reports to present a misleading picture of an organization’s financial position.
MEANING
Compared to other forms of occupational fraud, it occurs less frequently but typically results in severe financial, legal, and reputational damage.
EXAMPLE
Premature recognition of revenue to inflate earnings.
Forensic Evidence Handling
DEFINITION
Proper collection and preservation of evidence.
MEANING
Ensures legal admissibility.
EXAMPLE
Preservation of server logs.
Forensic Interviewing
DEFINITION
A structured interviewing technique used to gather reliable information during investigations.
MEANING
It supports fact-finding while respecting legal and ethical standards.
EXAMPLE
Investigators conduct structured interviews during an internal inquiry.
Fraud Case Frequency
DEFINITION
Number of fraud cases over a period.
MEANING
Supports trend analysis.
EXAMPLE
Increase from 5 to 9 cases per year.
Fraud Detection Methods
DEFINITION
Systematic methods used to identify fraud.
MEANING
Combining multiple methods increases detection likelihood.
EXAMPLE
Tips, data analytics, and internal controls.
Fraud KPI
DEFINITION
Quantitative metric used to measure fraud risk, cases, or control effectiveness.
MEANING
Supports management oversight and reporting.
EXAMPLE
Number of detected fraud cases per year.
Fraud Loss Amount
DEFINITION
Total financial loss caused by fraud.
MEANING
Key indicator of financial impact.
EXAMPLE
Total loss from fake invoices.
Fraud Loss per Case
DEFINITION
Average loss per fraud case.
MEANING
Supports risk prioritization.
EXAMPLE
Average loss of 120,000 CHF per case.
Fraud Prevention
DEFINITION
Measures designed to prevent fraud.
MEANING
More effective than post-incident response.
EXAMPLE
Employee awareness training.
Fraud Recovery Rate
DEFINITION
Percentage of recovered losses.
MEANING
Indicates recovery effectiveness.
EXAMPLE
30 percent recovered.
Fraud Reporting Timeliness
DEFINITION
Time between detection and reporting.
MEANING
Delays increase liability.
EXAMPLE
Late escalation to compliance.
Fraud Risk Assessment
DEFINITION
A structured process to identify, assess, and prioritize fraud risks across an organization’s processes and systems.
MEANING
It provides the foundation for effective prevention by identifying incentives, opportunities, and control weaknesses.
EXAMPLE
A company assesses procurement risks and identifies weak vendor due diligence.
Fraud Triangle
DEFINITION
The fraud triangle explains fraud through pressure, opportunity, and rationalization.
MEANING
It is a foundational model in fraud prevention and investigation.
EXAMPLE
Financial pressure combined with weak internal controls.
G
GDPR / DSGVO
DEFINITION
EU regulation governing personal data protection.
MEANING
High penalties for non-compliance.
EXAMPLE
Unlawful storage of employee data.
Ghost Employee
DEFINITION
Fictitious or terminated employees kept on payroll.
MEANING
Enabled by weak joiner, mover, leaver processes.
EXAMPLE
Salary paid to a non-existent employee.
H
Hidden Liabilities
DEFINITION
Omitting or concealing liabilities.
MEANING
Creates false financial strength.
EXAMPLE
Failure to record provisions.
High-Risk Process Exposure
DEFINITION
Percentage of high-risk processes.
MEANING
Supports risk-based allocation.
EXAMPLE
Procurement identified as high risk.
I
Identity Fraud
DEFINITION
The misuse of personal data to impersonate someone.
MEANING
Affects individuals and organizations.
EXAMPLE
Account opened using stolen ID.
Illegal Gratuities
DEFINITION
Providing or receiving benefits without explicit exchange.
MEANING
Creates dependency and ethical risk.
EXAMPLE
Gift given after contract award.
Improper Asset Valuation
DEFINITION
Intentional misvaluation of assets.
MEANING
Distorts financial ratios.
EXAMPLE
Overstated inventory values.
Improper Disclosures
DEFINITION
Incomplete or misleading disclosures.
MEANING
Reduces transparency.
EXAMPLE
Omission of key risks.
Internal Audit Detection
DEFINITION
Fraud detected through internal audit activities.
MEANING
Effective for process-related issues.
EXAMPLE
Audit identifies altered entries.
Internal Controls
DEFINITION
Internal controls are processes designed to ensure reliable operations and compliance.
MEANING
They are a key element in fraud prevention.
EXAMPLE
Segregation of duties in payment approval.
Internal Investigation
DEFINITION
Structured internal fact-finding process.
MEANING
Key response to misconduct.
EXAMPLE
Review of emails and transactions.
Inventory Theft / Asset Theft
DEFINITION
The unauthorized taking of an organization’s physical assets, including inventory, equipment, or materials.
MEANING
Common in environments with weak inventory controls and limited oversight.
EXAMPLE
An employee steals goods from the warehouse for personal resale.
Investigation Duration
DEFINITION
Time required to complete investigations.
MEANING
Long durations increase cost.
EXAMPLE
Investigation lasts six months.
Invoice Splitting
DEFINITION
Artificially splitting invoices to bypass approval thresholds.
MEANING
A common control circumvention technique.
EXAMPLE
Invoices are divided to avoid approval requirements.
K
Kickback Scheme
DEFINITION
A kickback scheme involves secret payments made in return for favorable business decisions.
MEANING
Such schemes distort procurement processes and increase organizational risk.
EXAMPLE
A purchasing manager receives hidden commissions from vendors.
SOURCES
Kickback Vendor
DEFINITION
A vendor providing secret payments to influence purchasing decisions.
MEANING
It distorts procurement decisions and increases fraud risk.
EXAMPLE
A supplier pays commissions to secure contracts.
SOURCES
Know Your Customer (KYC)
DEFINITION
Customer identification and verification procedures.
MEANING
Foundation for AML and fraud prevention.
EXAMPLE
Identity verification before onboarding.
L
Lifestyle Red Flag
DEFINITION
Unexplained personal wealth.
MEANING
Common internal fraud indicator.
EXAMPLE
Luxury lifestyle without income basis.
M
Management Fraud
DEFINITION
Fraud committed by senior management.
MEANING
High impact and difficult to detect.
EXAMPLE
Executive-led financial manipulation.
Management Override of Controls
DEFINITION
The deliberate bypassing of established controls by management.
MEANING
It is a high-impact risk because authority and access can neutralize control frameworks.
EXAMPLE
A manager forces an exception payment approval.
Management Review
DEFINITION
Review activities performed by management.
MEANING
Early detection of anomalies.
EXAMPLE
Management questions cost deviations.
Money Laundering
DEFINITION
The process of making illicit funds appear legitimate.
MEANING
Often linked to fraud and corruption.
EXAMPLE
Complex transactions with no clear rationale.
O
Occupational Fraud
DEFINITION
Occupational fraud refers to fraud committed by employees, managers, or executives against their employer for personal gain.
MEANING
It is the most common form of economic crime and typically involves abuse of trust, weak internal controls, or access to sensitive systems.
EXAMPLE
An employee diverts company funds by manipulating vendor payment processes.
Occupational Fraud Scheme
DEFINITION
A recurring method used to commit and conceal fraud.
MEANING
Understanding schemes supports prevention and detection.
EXAMPLE
Creating shell vendors and paying fake invoices.
Override Frequency
DEFINITION
Number of control overrides.
MEANING
High frequency indicates risk.
EXAMPLE
Frequent manual approvals.
Override of Approval Limits
DEFINITION
Splitting transactions below thresholds.
MEANING
Suggests deliberate avoidance.
EXAMPLE
Payments split under approval limits.
P
Phishing
DEFINITION
Attempts to trick users into revealing sensitive information.
MEANING
Often an entry point for broader attacks.
EXAMPLE
Fake IT support email requests credentials.
Politically Exposed Person (PEP)
DEFINITION
Individual holding prominent public function.
MEANING
Higher corruption and AML risk.
EXAMPLE
Minister identified as beneficial owner.
R
Red Flags
DEFINITION
Indicators or patterns that may suggest fraud or abuse.
MEANING
They are early warning signals, not proof.
EXAMPLE
Repeated payments just below approval thresholds.
Register Disbursement Scheme
DEFINITION
Improper payments made through legitimate disbursement systems.
MEANING
Often involves fake documentation.
EXAMPLE
Payment made to a fictitious vendor.
Regulatory Enforcement Action
DEFINITION
Action taken by regulators.
MEANING
Enforces compliance.
EXAMPLE
Fine imposed for AML breach.
Regulatory Reporting Obligation
DEFINITION
Legal duty to report to authorities.
MEANING
Failure may result in sanctions.
EXAMPLE
Suspicious activity report filed.
Repeat Offender Rate
DEFINITION
Percentage of repeat fraud offenders.
MEANING
Signals systemic weaknesses.
EXAMPLE
Repeat fraud in same unit.
Revenue Recognition Fraud
DEFINITION
Revenue recognition fraud involves intentionally recording revenue in a manner that does not reflect the underlying economic reality.
MEANING
It is a core financial statement fraud scheme aimed at inflating financial performance, often driven by pressure to meet earnings targets or incentive-based compensation. It can mislead investors, regulators, and other stakeholders.
EXAMPLE
Premature revenue recognition.
Round-Tripping
DEFINITION
Transactions with no economic substance.
MEANING
Artificially inflates revenue.
EXAMPLE
Reciprocal billing schemes.
S
Sanctions Compliance
DEFINITION
Compliance with international sanctions regimes.
MEANING
Critical legal and reputational risk.
EXAMPLE
Blocked payment to sanctioned entity.
Segregation of Duties
DEFINITION
The separation of key process steps across different people or roles.
MEANING
It reduces the risk of end-to-end fraud by a single individual.
EXAMPLE
The user creating vendors cannot approve payments.
Shell Company
DEFINITION
A legally registered entity with little or no operational activity.
MEANING
Shell companies are not inherently illegal but may represent a red flag depending on context.
EXAMPLE
Payments made to an entity with no real business operations.
Skimming
DEFINITION
The theft of cash before it is recorded.
MEANING
Difficult to detect because no accounting record exists.
EXAMPLE
Cash sales are not recorded.
Social Engineering
DEFINITION
Social engineering manipulates individuals into disclosing confidential information.
MEANING
It exploits human behavior rather than technical vulnerabilities.
EXAMPLE
Business email compromise schemes.
Substantiated Case Rate
DEFINITION
Percentage of substantiated cases.
MEANING
Measures investigation quality.
EXAMPLE
40 percent substantiated.
Suspicious Activity Report (SAR)
DEFINITION
Formal report of suspicious activity.
MEANING
Core AML mechanism.
EXAMPLE
Reporting unusual transactions.
Swiss Data Protection Act (DPA)
DEFINITION
Swiss federal data protection law.
MEANING
Governs investigations and data handling.
EXAMPLE
Restricted access to HR data.
T
Time to Detection
DEFINITION
Time required to detect fraud.
MEANING
Critical for loss mitigation.
EXAMPLE
Fraud identified within two weeks.
Timing Anomalies Red Flag
DEFINITION
Transactions at unusual times.
MEANING
May indicate concealment.
EXAMPLE
Late-night postings.
Tips and Whistleblower Reports
DEFINITION
Information received from employees, customers, or third parties.
MEANING
Most common fraud detection source.
EXAMPLE
Anonymous hotline report.
Tone at the Top
DEFINITION
The ethical example and leadership set by senior management.
MEANING
Consistent leadership behavior significantly reduces fraud risk.
EXAMPLE
Leadership enforces expense rules consistently.
Trading in Influence
DEFINITION
The offering or receiving of benefits in exchange for the use of real or perceived influence over decision-makers.
MEANING
It represents a subtle form of corruption that undermines institutional integrity.
EXAMPLE
Payments are made to influence regulatory or political decisions.
SOURCES
Training Coverage Rate
DEFINITION
Percentage of employees trained.
MEANING
Supports prevention.
EXAMPLE
90 percent complete fraud training.
Transaction Monitoring
DEFINITION
The systematic monitoring of transactions to detect anomalies.
MEANING
Core tool for AML and fraud detection.
EXAMPLE
Alert triggered by unusual refund activity.
Transaction Pattern Red Flag
DEFINITION
Unusual transaction patterns.
MEANING
Suggest structured fraud.
EXAMPLE
Repeated small payments.
U
Unreconciled Accounts Red Flag
DEFINITION
Unreconciled balances.
MEANING
High fraud exposure.
EXAMPLE
Cash discrepancies.
Unusual Write-Offs Red Flag
DEFINITION
Unusual write-offs.
MEANING
May hide manipulation.
EXAMPLE
Large receivable write-offs.
V
Vendor Fraud
DEFINITION
Fraud committed by suppliers against an organization.
MEANING
Often enabled by weak procurement controls.
EXAMPLE
Billing for services not performed.
Vendor Red Flags
DEFINITION
Unusual vendor characteristics.
MEANING
May indicate shell entities.
EXAMPLE
Vendors sharing addresses.
W
Whistleblower Protection
DEFINITION
Legal protection for whistleblowers.
MEANING
Encourages reporting.
EXAMPLE
Protection from retaliation.
Whistleblower Retaliation
DEFINITION
Adverse actions against individuals reporting misconduct.
MEANING
Discourages reporting and detection.
EXAMPLE
Demotion after submitting a tip.
Whistleblower Usage Rate
DEFINITION
Number of reports relative to workforce size.
MEANING
Low rates may indicate fear or mistrust.
EXAMPLE
2 reports per 1,000 employees.
Whistleblowing
DEFINITION
Whistleblowing involves reporting misconduct within an organization.
MEANING
Most fraud cases are detected through tips.
EXAMPLE
Anonymous report via a whistleblower hotline.