White Collar Crime as a Non-Violent Type of Crime - Assignment Example

White Collar Crime as a Non-Violent Type of Crime Introduction White collar crime refers to a non-violent type of crime which someone commits specifically for financial gains. The dominant types of white collar crimes include misrepresentation of securities (fraud), illegal and dishonest financial actions (corporate fraud), misuse of finances (embezzlement), and attributing criminal-acquired funds as being genuinely acquired (laundering). These crimes are mostly organizational and are committed by office workers, fund managers, members of the executive, or business managers. The crimes are detected by whistle blowers, auditors, and forensic accountants (“White-collar Crime”, 2014). Owing to its organizational nature, white collar crime requires an organizational approach towards mitigation. The text in this study will define through a proposal addressed to a financial institution how a Chief Risk Officer can strategize and implement measures to curb white collar crime within a financial institution. The text will highlight a risk strategy, overall organizational chart, software and technology, and finally the procedures and policies that will see to it that the institution’s finances are safe and transparent. Risk and Regulatory requirements Every organization requires measures that address threats or potential risks which may act as loopholes leading to white collar crime within or beyond the organization. The offered consultative measures feature governance that is sustainable, programs that manage risks, and compliance with the set measures that work to manage, monitor, identify, and remediate the entire organizing process in preventing the vicious. Access Access means that all organizational documentation and data has controlled exposure to affect both its security and privacy. This is because access to such crucial aspects of an organization means that modification and/or misuse of the same can enable the one possessing them to exercise whatever they wish. The set access controls should be designed to ensure that the right person access the information or documentation they need, only when they need it. This is important because unauthorized personnel cannot misuse such, and in case of any crime, then it is possible to narrow down to the few who have the access (Pontell & Geis, 2010). Again, security should go beyond the organization level, especially in cases where there is internet use. Most firms store or conduct their activities online, where it is known that virtual transactions and storages are prone to cracking and hacking. As such, there should be measures that comply with up-to-standard IT security to curb these risks. This involves an IT department and software applications. Duty segregation This measure adheres to the 2002 Sarbanes-Oxley Act, which dictates that an employee should only take care of a single task and not multiple as this is key in securing the integrity of an organization. Segregation will enable every employee to take care of one duty thus avoid contradictions that may lead to exposure of crucial data or documentation. Again, it will enable investigations to find out where a flaw occurred and which person or department was responsible for it. Traceability Keeping track of an organization’s every activity is key in managing risks that may expose the organization to white collar crime. It involves application of tracking or alibi recording measures that capture each and every transaction (activity) which is executed by the members of the entire organization. This will work in that the involved persons will always be cautious of their actions, and again, it will be possible to do a follow-up to a certain fault and identify who or what went wrong. The tracking and recording measures include live monitoring of intra-office activities using circuit televisions, storage of all computer transactions and data, documentation of hard copies, and provision of proofs of all transactions and activities. In addition, all these measures should be secured from unauthorized access or modification (Pontell & Geis, 2010). Employee integrity Integrity is also a paramount actor to consider when dealing with financial and overall organization activities. This means that the employees should be those who can always do the right thing when no one is watching over them. An integral employee will depict traits of responsibility, reliability, and honesty, and as such, reduce the risks of contradicting any intra-organization flows. This should be conducted before an employee is hired, where measures to evaluate their integrity should be applied, and also during their working tenure. This is the most crucial determinant of an institution’s financial (and overall) security. Overall Organizational Chart and Implementation Strategy A hierarchical organization structure is an effective strategy which if put to proper use can strengthen the financial security of any organization. Such a structure defines the constituent posts or positions, and goes on to define what kind of an employee is required for the said role. The allocation of the posts is determined by one’s competency in that particular field (Wheeler, 2011). In this hierarchical structure, the matters of security will be handled at three varying levels by four segregations of personnel, with each level having a different management power level that its preceding one. The structure will start from the staff level, which is split into operations and a dedicated security evaluation and control department for each department in the organization that will report to the overall security evaluation committee. This evaluation committee will in turn report to the organization’s deputy director who (if need be) reports to the director. The summarized structure is as appears in figure 1: Commands Concerns Figure 1: Organization’s security hierarchical structure. Staff The staff in the above structure refers to the personnel who execute the overall organization’s roles; those who do the actual tasks that define the institution. They may be bank tellers, system administrators, cashiers, security agents, and all other support staff. The staff category is divided into the operations and security departments where the security department is a much smaller segregation which manages and evaluates the operations activities. They also receive security concerns from the operations staff and evaluate on the best means of addressing whatever breaches occur. However, if any, raised concern is out of their handling capacity, they report this to the security evaluation committee (department). Security evaluation committee The security evaluation committee upon receiving the security concerns evaluates them and applies to their level, the most effective means of addressing the issue. As such, the personnel at this level need to posses better skills in addressing the issues at hand than the [preceding] security department at the staff level. This department can direct the lower departments on how to apply mitigation or corrective measures in curbing whatever security loopholes that may expose the organization to fraud. For instance, a member of the staff-level security department may be involved in a crime, and the fellow members cannot vet or fire him/her. That calls for higher intervention which in this case can be offered by the security evaluations department. Deputy Director Upon unsuccessful application of all available corrective or preventive measures, the security evaluations committee can report the concerns to the deputy director. The deputy director may not possess the required measures to curb the issue at hand, but posses the authority to involve the combined efforts of the staff, operations security department, and security evaluations department. Collective evaluations may be required at some point, such as addressing an urgent security threat. For instance, conflicts between two departments may require higher intervention by the deputy director since neither the operations security staff nor the security evaluation committee can quell such an issue. Director The director is the highest party in the organization’s hierarchy. He/she receives concerns from the deputy director, of which the issues have to be those that all the preceding departments could not address. This means that such a forwarded issue is insolvable within the organization and might require external assistance. This is where the deputy director reports to the director who in turn lobbies for the most effective external help from different firms or organizations. For instance, the director can proceed to court in the instant where an employee has been accused of a financial fraud crime within the organization. This is because the organization cannot punish the accused, and only the director can authorize procession to the court. The director also initiates the backward flow of control in that after a new or newly devised mitigation measure becomes available, he/she orders it down the ladder. For example, if all the staff is required to present reports concerning a departmental issue (crime), the director presents this to the deputy who dictates it to the operations staff through other departments until this gets to the operations staff. Policies and Procedures Nervis (2012) acknowledges that while eliminating the vice is impossible, it is possible to reduce the conditions that support the development of risks that contribute to its occurrence. The effective methods that exist work to prevent white collar crimes from happening, and where it has happened, find out who did it and why. As such, there are some common policies and procedures that can be set up to reduce and punish the offenders. They include: Zero tolerance of fraud Any organization that knows the effects of white collar crimes sets up policies that do not support fraud at any one level, at any one time. The best way to do this is to lead by example, which applies mostly to the top managers. If they exhibit no tolerance of such, then the employees themselves will not be tempted to indulge in the vice. However, if there are always cases of fraud within the organization leaders, then the subordinate employees might perceive of the matter lightly and indulge in it as well. A positive working environments The working environment includes both physical and virtual aspects of the workplace. All the procedures at the workplace should foster the development of the employees and not suppress them. If an employee is happy with their workplace, then they are less likely to breach set policies and procedures. In application for instance, an underpaid employee will obviously grab the first chance they come across to make some extra money to better their lives. Whistle blowing policies Whistle blowing works best where the organization observes outmost autonomy and confidentiality, thus cultivating and encouraging whistle blowing. Whistle blowing is effective in fighting the vice because once any misconduct is noticed, then it gets to the right channels secretly, enabling fast action and prevention of extensive loss to the organization. Comprehensive recruitment policies During the recruitment exercise, the hiring parties should take some considerations into place. The procedures should ensure that the recruit’s integrity, qualification, documentation, and background are all free of any negative flaws. Such recruitment policies filter out any potential recruits who might turn to fraudsters after joining the organization. Past employment with regards to any employment gaps should be vetted, and if necessary, legal verification be incorporated. Monitoring and supervision Through the entire working schedule, close monitoring and supervision should be part of any workplace. Monitoring and supervision of activities is a deterrent to fraud, and makes the employees to be wary of engaging in fraudulent activities. The reasons why most fraud activities succeed is because employees deviate from the normal controls and processes without any supervision. The concerned persons should be made to explain the reasons for any deviations from the normal. Conducting investigations This procedure is very crucial especially where a crime has occurred and there is need to ascertain the cause and person responsible for the fraud. Investigations may be conducted within the organization, but if gets out of hand, then external assistance from legal authorities might be needed. Preliminary investigations can be carried out by auditors, accountants and other qualified financial evaluators, and then the authorities such as the police can come in after sufficient evidence has been found. Codes of conduct and ethics The final and very effective policy is to have a clearly defined and communicated a code of conduct/ethics. These are sets of rules which govern the conduct of employees while at the organization, and what is expected of them. Such codes should include strict rules that entail fraud and the consequences that follow such cases if discovered. The best means of communicating is through such training programs which explain why these codes are set that way. Concisely, they should address integrity and honesty. Software and Technology Technology has both its good and bad sides. The bad side is that fraudsters from both within and beyond the organization can contradict the systems and commit crimes. Cyber criminals hack and gain access to crucial and confidential credentials such as credit cards and financial transactions. On the contrary side of technology, it can also be a strong and effective security and investigative measure. Some of the uses of software and technology in uncovering and preventing white collar crimes are discussed herein. Unearthing financial statement frauds Today, most organizations record and maintain their data on computer hard drives which enable them to save all the activities and records carried out. In short, each and every incoming and outgoing event is recorded and kept for later reference. As such, it is possible to retrieve the saved information and compare the records with those provided by employees. If they differ, then they mean some fraud has occurred (Gerber & Jensen, 2006). Preventing and finding duplicate payments Duplicate payment is one major aspect of white collar crime, where on records; one may pay out some money more than once or claim to have paid some money to a non-existing person. However, with special auditing and balancing software, such activities can be stopped, or a notification created and sent to superior administrators anonymously. Preventing access to credentials Technology can secure private and confidential data in automated ways. This includes securing databases with strong passwords, or using smart cards, eye scanners, and laser technology to prevent unauthorized access. The systems can be made to send notifications when they detect unusual attempts of violation. Technology is also used through special software to prevent networks and virtual traffic and storage from being accessed by hackers (Gerber & Jensen, 2006). These methods include data encryption and anti-phishing measures such as use of Virtual Private Networks, which create false identities and traffic, thus preventing hackers from hijacking information that assists them in hacking. Although these technological methods are readily available nowadays, they can be costly to implement and maintain. This is because they force the administrative costs to shoot upwards because an organization requires back-office services to run the fraud prevention and detection systems. Again, the purchases and installations are costly and to add to this, they require regular updating to put up with the fast varying technology so as to be safe from cyber insecurity. Finally, the staff needs to be trained regularly when new technologies pop up for their illiteracy. Conclusion From the study, it is evident that just like its origin; white collar crime requires an organizational approach in curbing it. Moreover, it manifests itself through many ways, but all of them translate to losses in the affected firm(s) thus the need to minimize its occurrences. In prevention and investigation of the vice, there are four levels of curbing it; one, effecting risk and regulatory measures which prevent the crimes from happening, and also preventing their re-occurrence. Two, the involvement of the entire organization in preventing it; three, effecting policies and procedures which are against the vice, and finally, applying technology and software developments to prevent, detect, notify and investigate cases of white collar crime. Finally, the study has revealed that while it is necessary for financial institutions to prevent white collar crimes, some aspects of the prevention might be costly. This is the case with using technology since it requires much purchase, installation, training and maintenance, but if an institution is aware of what white collar crime can result in, it is worth the expenditure; talk of preventing rather than regretting. References Gerber, J., & Jensen, E. L. (2006). Encyclopedia of white-collar crime. Westport. Conn: Greenwood Press. Nervis, S. (2012). “White Collar Crime.” Deloitte. 1-5. Pontell, H., & Geis, G. (2010). International Handbook of White-Collar and Corporate Crime. Springer. Wheeler, E. (2011). “Organizational Structure: What Works.” RSA Conference. 1-18. “White Collar Crime.” (2014). Investopedia. Retrieved on 21 March, 2014 from http://www.investopedia.com/terms/w/white-collar-crime.asp Read More