Fraud Risk Research Articles

STRENGTHENING COOPERATION FOR CUSTOMS RISKS MANAGEMENT AT EUROPEAN BORDERS IN THE NEW REGIONAL SECURITY CONTEXT

In the current security context of the Black Sea region, trade relations are affected by the imperative of international sanctions, which have imposed a series of restrictions that make it difficult for professionals to carry out commercial contracts. Through the 12 packages of restrictions established by the EU, following Russia's invasion of Ukraine, the supply of raw materials from the East and exports to these destinations are largely blocked. The risk of fraud is evident as long as production facilities are designed for the use of certain categories of goods in the supply chain, which are currently under economic embargo or directed toward specific markets. Integrated border management is a priority for authorities, and consolidating cooperation for customs risk management involves adopting exceptional measures. This study aims to identify the gaps in the Union's regulatory framework regarding risks and the critical knowledge of control authorities regarding the processes defined for processing customs and commercial documents within import-export operations at the Union's external eastern border. The scope, interpretation, and effects of European and international legal provisions constitute a separate analysis of the exceptional nature of international sanctions.

Digital Entrepreneurship, The Risk and Business Viability Assessment in Nigeria

The study assessed digital entrepreneurship, the risk and the business viability in Nigeria. The study's specific goal is to ascertain the degree of viability and risk assessment of digital entrepreneurship in Nigeria’s economic space. Digital entrepreneurship is a 21st century business model because it is an enterprise that relies only on a digital platform that is pursued and managed by a digital entrepreneur. Digital entrepreneurs rely on internet resources to create and expand their digital services enterprises. The study's sample included 400 respondents who were chosen from Delta State's small and medium-sized business owners and proprietors. The adopted descriptive survey method and simple percentages were used to evaluate the data. The overall conclusion of the study is that digital entrepreneurship is a highly effective and viable business model in Nigeria and it is fantastic in bringing goods and services to customers' doorsteps, provides business owners with a platform for brand development and content creation as well as business growth. The study identified five major risks associated with digital entrepreneurship as cyber security risk, information security and privacy risk, fraud risk, copyright violation risk, infringement of trademark risk. The study confirmed that digital entrepreneurship creates business values at profit with lower cost of production when compared to the cost of operating physically established businesses or other means of doing business offline. The study also concludes empirically that digital entrepreneurship has a low possibility of loss but high profit possibility with the ability to manage the four identified risks.

Ethical Leadership and Financial Reporting Practices in Chad

Purpose: The aim of the study was to assess the ethical leadership and financial reporting practices in Chad. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The study indicated that when leaders prioritize ethical conduct and integrity, it positively influences how financial information is reported and communicated to stakeholders. Ethical leaders foster a culture of transparency, accountability, and honesty, which leads to more accurate and reliable financial reporting. This, in turn, enhances investor confidence, reduces the risk of financial fraud, and promotes long-term sustainability for the organization. Studies also highlight the importance of ethical leadership in regulatory compliance, as leaders who prioritize ethics are more likely to ensure that financial reporting practices adhere to legal and ethical standards. Overall, the link between ethical leadership and financial reporting practices underscores the significant impact that leaders have on the integrity and credibility of financial information within companies. Implications to Theory, Practice and Policy: Transformational leadership theory, stakeholder theory and agency theory may be used to anchor future studies on assessing the ethical leadership and financial reporting practices in Chad. Organizations should implement comprehensive ethics training programs for leaders and employees to enhance ethical awareness, decision-making, and behavior related to financial reporting. Policymakers and regulators should strengthen regulatory oversight and enforcement mechanisms related to financial reporting practices.

Impact of Blockchain Technology on Financial Reporting in Small and Medium-Sized Enterprises (SMEs) in Pakistan

Purpose: The aim of the study was to assess the impact of blockchain technology on financial reporting in small and medium-sized enterprises (SMEs) in Pakistan. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The study indicated that blockchain's decentralized ledger system enhances transparency and accuracy in financial data recording and reporting. It reduces the risk of fraud and manipulation due to its immutable nature, ensuring that transactions are securely recorded and traceable. This technology streamlines processes, such as auditing and reconciliation, leading to cost savings and increased efficiency for SMEs. Additionally, blockchain's real-time data availability improves decision-making capabilities and enhances trust among stakeholders. However, challenges such as regulatory compliance and implementation costs remain, requiring careful consideration for SMEs looking to adopt blockchain for financial reporting. Implications to Theory, Practice and Policy: Diffusion of innovations theory, agency theory and resource-based view may be used to anchor future studies on assessing the impact of blockchain technology on financial reporting in small and medium-sized enterprises (SMEs) in Pakistan. In practice, SMEs are encouraged to initiate pilot projects that leverage blockchain-based financial reporting solutions. On the policy front, advocating for regulatory clarity and supportive frameworks is essential to promote blockchain adoption among SMEs.

Financial Statement Fraud Risk and Financial Distress of Family Business: Socio-Emotional Wealth (SEW) Perspective

Financial Statement Fraud Risk and Financial Distress of Family Business: Socio-Emotional Wealth (SEW) Perspective

Cloud-Based Transaction Fraud Detection: An In-depth Analysis of ML Algorithms

Context: Cloud-based services are increasingly central in financial technology, enabling scalable and efficient transactions. However, they also heighten vulnerability to fraud, challenging the security of online financial activities. Traditional fraud detection struggles against sophisticated tactics, highlighting the need for advanced, cloud-compatible solutions. Objectives: This study assesses machine learning (ML) algorithms' ability to detect fraud in cloud environments, focusing on Logistic Regression (LR), Decision Trees (DT), Random Forest (RF), Support Vector Machines (SVM), and XGBoost (XGB). It uses a comprehensive dataset to determine which ML model best identifies fraudulent transactions, aiming to optimize these models for accuracy, precision, and efficiency in real-time detection. Results: The XGBoost model outperformed others in fraud detection accuracy, with Random Forest and Decision Trees also showing high effectiveness. These models were particularly good at balancing precision and recall, minimizing false positives, and accurately identifying fraud in complex transaction patterns. Conclusion: ML, especially ensemble and boosting models like XGBoost and Random Forest, offers a strong approach to detecting transaction fraud in cloud-based financial systems. Their capacity to handle vast data volumes and adapt to new fraud patterns enhances cloud transaction security. Implication: The study provides a guide for financial and cloud services to implement sophisticated fraud detection systems. It emphasizes the importance of continual ML innovation to tackle digital finance fraud, suggesting that adopting these advanced ML models can significantly reduce transaction fraud risks, ensuring a secure, efficient, and trustworthy platform for users.

Integration of Blockchain Technology in Education Financial Management for Transparency and Accountability

The education system requires transparent and accountable financial management to ensure efficiency, fairness and sustainability. However, there are still many challenges in achieving this, especially related to limited transparency and reliability of financial data. Blockchain technology offers the potential to increase transparency and accountability in educational financial management by providing proof of authentication and an immutable track record. This research aims to explore the potential for integrating blockchain technology in educational financial management to increase transparency and accountability. Researchers also aim to analyze its impact on efficiency and fairness in the education system. This research method uses a qualitative approach with literature study and case analysis. Researchers analyzed literature related to blockchain technology in the context of educational financial management, and collected data from case studies of blockchain technology implementation in educational institutions that have adopted it. The research results show that the integration of blockchain technology in educational financial management can increase transparency and accountability by providing immutable proof of authentication for every financial transaction. In addition, the use of blockchain technology can increase the efficiency of financial administration processes and minimize the risk of fraud or data manipulation. The conclusion of this research is that the integration of blockchain technology in educational financial management has great potential to increase transparency, accountability and efficiency in the education system. However, challenges related to infrastructure availability and technical understanding need to be overcome to optimize its benefits. Therefore, strategic and collaborative steps from related parties are needed to encourage widespread adoption of this technology in educational financial management.

FRAUD PREVENTION STRATEGIES IN INDONESIAN MSMEs: THE SIGNIFICANCE OF HONESTY AND INTERNAL CONTROL FACTORS

This study highlights the role of honesty and internal control in preventing fraud in Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. MSMEs are an important pillar in the national economy, but face challenges such as poor management, limited human resources, and fraud. This study examines the impact of a culture of honesty and the implementation of effective internal controls to reduce fraud risk. The sample consisted of 150 MSMEs. Testing was performed using SmartPLS. The results show that honesty and good internal control can increase the reliability of financial information, operational efficiency, and consumer trust. In addition, the implementation of internal control, which includes risk assessment, control activities, and information and communication, has proven to be effective in mitigating the risk of fraud. To support MSMEs in moving up in class and achieving sustainable success, the government and other stakeholders must provide management guidance, training, and support programs that focus on increasing honesty and internal control. Thus, MSMEs can be better prepared to face business challenges, reduce the risk of fraud, and contribute more to national economic growth. Keywords: Fraud, Honesty, Internal Control, Micro Small and Medium Enterprises, MSMEs

A Postmortem of Financial Frauds: The 5S Approach

"Modern world, saturated with innovations and digital technologies, opens numerous opportunities for development and convenience. However, along with these opportunities, the likelihood of becoming a target of fraud rises. Financial crimes are becoming more pronounced and sophisticated, utilizing new technical and social methods of influence. With these changes, existing risks, including fraud risk, have significantly increased. In spite of extensive endeavors to eliminate fraudulent actions, apparently fraud in its different forms persists and is escalating in both occurrence and magnitude. Identifying fraud schemes is a crucial aspect of fraud detection. Detecting fraud risks at an early stage can bolster investor protection, enhance investment returns, prevent costly legal battles, and promote efficient operation. This study concentrates on the various facets of fraud. It examines the pre and post-effects of fraud. It also involves extensive research on the available literature on financial and non-financial frauds and has come out with a conceptual model that helps to give an overall 360-degree view of the concept of fraud. This work gives a theoretical insight into fraud. It reveals a five-part comprehensive approach termed as the 5S approach to analyze and view the concept of fraud, namely the Segregation of fraud, Schemes used to commit these frauds, Stimulus for committing these types of frauds, the Significant Consequences or the resultant effects of fraud and finally the ways of reducing or countering these frauds or the specific remedies to negate or overcome these frauds."

Compliance combined with LGPD as a tool to combat corruption

This is research on Compliance acting as a risk prevention model in the management of organizations, addressing the reduction of fraud and corruption risks. Due to this entire scenario, the following problem arises: What is the significance of Compliance in relation to the management of organizations? The objective of this study is to present the importance of companies adopting and following the Compliance program, taking into account this mechanism for preventing risks of an illicit nature. The specific objectives aim to identify and conceptualize corruption and organizational fraud; the importance of Digital Compliance in business management has been demonstrated; understand Digital Compliance as a Compliance mechanism, analyzing how its application can directly affect organizations; research good practices such as Compliance strategies. The test work will be developed through the analysis of the importance of implementing Digital Compliance in the organizational environment with the aim of prevention, in addition to indicating and reducing issues related to the risks of fraud and corruption.

PROTECTION OF MINORITY SHAREHOLDERS FROM FRAUD IN LIMITED LIABILITY COMPANY DIVIDEND DISTRIBUTION

<p>This research investigates the potential fraudulent actions carried out by majority shareholders and other corporate organs in the context of stock distribution. The primary focus is on the continuity of practices that may disadvantage minority shareholders and undermine the legal protections they should receive. Majority shareholders, often wielding significant influence in the General Meeting of Shareholders (RUPS), may exploit their power to manipulate decisions related to stock distribution. The presence of a quorum that can be achieved without the participation of minority shareholders increases the risk of fraud in this process. The aim of this research is to identify various fraudulent actions that may occur in stock distribution by majority shareholders and related corporate organs. Using a legal analysis approach and case studies, this research also explores ways in which minority shareholders might prevent or respond to fraudulent actions. Furthermore, the research examines the extent to which Law No. 40 of 2007 concerning Limited Liability Companies (UU PT) provides a legal basis to prevent and respond to fraudulent actions in stock distribution. Practical implications of potential fraud are analyzed to provide recommendations that can strengthen legal protections for minority shareholders. This research is expected to contribute to a deeper understanding of the dynamics of fraud in stock distribution, outline the legal challenges faced by minority shareholders, and formulate concrete steps to prevent and respond to such fraud in companies.<em></em></p>

Tackling digital payment frauds: a study of consumer preparedness in India

Purpose This paper aims to present a study to measure “Consumer Preparedness” (CP) towards digital payment frauds by considering factors such as awareness regarding fraud risk (“Awareness”), implementation of measures (“Protection”) and actions to be taken in case of fraud (“Responsiveness”). Design/methodology/approach This study reviews existing literature to understand various typologies of digital payment fraud. The data of 372 consumers was collected using a structured questionnaire. The data was analyzed using analysis of variance (ANOVA) and Chi-square. CP score was calculated based on awareness score, protection score and responsiveness score. Findings The study shows that the score for the level of awareness was low, for the level of protection was moderate and for the level of responsiveness was high, leading to an overall moderate level of preparedness. Further, a moderate association was observed between demographic factors and the level of preparedness. Practical implications The authors recommend proactive and reactive measures for Central Banks regarding central fraud registry and intelligence exchange, consumer fraud vulnerability assessment model and mandating fraud risk management controls. Further, financial institutions are recommended to permit payment from registered devices only, implement strong customer authentication (including biometric authentication) and conduct periodic awareness sessions. Originality/value The existing body of knowledge does not have a model or scoring mechanism to assess the preparedness of consumers to tackle digital payment fraud. The research paper adds a classification of fraud typologies and an exploratory approach to measure the CP score.

Good Islamic Boarding School Foundation Management as Risk Mitigation for Organizational Performance Management & GCG

The fundamentals of sound foundation management can assist businesses in reducing the risks associated with performance management. Principles like accountability, transparency, responsibility, fairness, and justice are all part of the GCG in practice. Businesses can lower the risk of fraud and data manipulation by putting GCG principles into practice and ensuring that the decision- making process is conducted in an open, responsible, and fair manner. Establishing a code of ethics and strong foundation management standards, as well as boosting the openness of financial reports, are some GCG measures that can aid in reducing the risks associated with organisational performance management. However, organisations must also take into account other elements including effective risk management, the application of ethical standards, and the creation of a strong organisational culture in order to mitigate the risks associated with organisational performance management. Good corporate governance is not the only solution to this problem. In actuality, including GCG into a comprehensive risk management plan can assist businesses in improving performance and gaining the confidence of stakeholders. Therefore, in order to enhance performance and reduce risks associated with financial, ethical, and governance difficulties, businesses must pay attention to GCG techniques while mitigating organisational performance management risks.

Fraud detection in the fishing sector using hyperspectral imaging

Currently, more and more consumers are interested in the quality, safety, and authenticity of food products. The fishing sector is the second food category with the highest risk of fraud and the greatest presence of authentication problems. There are non-destructive, fast and accurate techniques for real-time authentication, with hyperspectral imaging (HSI) standing out among these. In this context, the main aim of this study is to explore the viability of HSI in the visible and near infrared (VIS-NIR) and near infrared (NIR) ranges for the detection of fraud by origin and by non-declaration of the previous freezing process, in anchovies. The spectral pretreatment methods used were the standard normal variate method, the Savitzky-Golay 1st derivate and the Savitzky-Golay 2nd derivate, always followed by mean centering (MC). In addition, the impact of using a previous step of smoothing prior to pretreatment was also evaluated. Two classification algorithms: soft independent modeling of class analogy, and partial least squares discriminant analysis (PLS-DA) were used to build the classification model. After analysis, it was found that the modelling results using the VIS-NIR region were always better than those using the NIR region, and the best performing model was by PLS-DA with a recall of 0.97 for fresh and 0.98 for frozen-thawed anchovies and 0.98 for Cantabrian anchovies and 0.96 for Mediterranean anchovies. One advantage of the model obtained is the ability to classify the anchovies measuring on the skin side of fish without the need for sample preparation. Overall, the results showed that HSI combined with PLS-DA is a favorable solution for rapid, and non-destructive recognition of adulteration regarding freshness and origin in anchovies.

Fear and perceived risk of cyber fraud victimization among Chinese University students

Cyber fraud has surfaced as a serious social problem in China, resulting in billions of Chinese yuan worth of financial losses in recent years. The high prevalence and large quantity financial losses from cyber fraud have sparked widespread public concerns about online safety. Based on survey data from over 1000 university students in China, this study explores the prevalence of fear and perceived risk of cyber fraud and its correlates among university students. The results showed that although only 10% of the respondents believed they would likely experience cyber fraud victimization in the next 12 months, approximately 50% reported feeling fearful of cyber fraud in the past 3 months. The logistic regression results show that both fear and perceived risk are influenced by different domains of risk factors, with higher self-control and deviant online behaviors explaining greater odds of fear. In contrast, the perceived risk of crime is linked to vicarious victimization experiences, perceived crime seriousness, and satisfaction with the police. Implications for future research and policy are discussed.

Analysis of Fraud Patterns in Islamic Banking Transactions: Strategies and Implementation of Prevention

The research aims to analyze patterns of fraud in Sharia banking transactions and identify effective prevention strategies. The method used is a qualitative approach with case study data collection. The research findings reveal various common patterns of fraud, such as identity theft, document forgery, transaction manipulation, and misappropriation of funds. Factors such as weaknesses in the transaction system, weak security policies, and lack of employee training influence the occurrence of fraud. Prevention strategies that can be implemented include early detection systems, strict security policies, employee training, and cooperation with authorities. It is hoped that the research findings can assist Sharia banks in enhancing transaction security, protecting customers, and minimizing fraud risks.

Blockchain-Enabled Conceptual Framework for Enhancing Academic Transcript Issuance and Authentication in the Nigerian Educational System

The issuing and authentication of academic transcripts are essential in the ever-changing landscape of educational systems since they serve as a means of validating an individual's academic achievements. However, difficulties in confirming these transcripts' authenticity exacerbated by manual procedures and paper-based system have raised questions about their legitimacy, especially in Nigeria. To address these urgent issues, this research presents a conceptual revolutionary blockchain-based framework for the Nigerian education system. The suggested solution will reduce dependency on issuing institutions and improve system efficiency by providing digital transcripts and automated authentication processes by utilizing blockchain's decentralized nature, transparency, and security features. The system will use blockchain-stored hash values for authentication and integrates on-chain revocation features to protect data integrity, reduce fraud risks, and enable quick and dependable authentication. By filling a vacuum in the literature, concentrating on issues unique to transcripts, and offering a contextually appropriate solution that has the potential to completely transform the Nigerian academic transcript issuance and authentication process, this work advances our collective understanding.

Fair value accounting standards and securities litigation

We examine the effect of fair value standards on firms' litigation risk. The discretion required by fair value allows plaintiffs to “second guess” managers' judgments, potentially increasing litigation risk. Alternatively, the complexity of fair value may decrease litigation risk if it's more difficult to demonstrate scienter. Our evidence suggests firms that rely more on fair value standards are relatively less likely to be sued. We find no evidence of a relation between fair value and the risk of misstatements or fraud, but do find evidence of a slight increase in firms' litigation risk via an increase in volatility. However, the primary effect of fair value standards in reducing litigation risk dominates the volatility effect. Finally, we find average litigation rates increase after the passage of new standards, but less so for fair value standards. On balance, our evidence suggests fair value is a relatively low litigation risk area in GAAP.

Innovative approaches in forensic accounting: The role of data analytics

Abstract The integration of data analytics into forensic accounting has revolutionized the detection and prevention of financial fraud. This paper conducts a comprehensive analysis of recent advancements in this field, highlighting the application of machine learning, data mining, and big data techniques in identifying fraudulent activities. By reviewing the latest research and examining case studies, we demonstrate the enhanced accuracy and efficiency these technologies offer over traditional methods. The findings suggest that financial institutions should adopt these advanced tools to mitigate fraud risks and improve overall financial security. The paper also explores future research directions, emphasizing the need for developing hybrid models and real-time detection systems to further enhance fraud detection capabilities.

Digital Financial Services Effort in Enforcing Anti-Money Laundering through Open Banking Optimization

Technology has revolutionized finance, but seamless services increase fraud risks. As digital finance grows, anti-money laundering (AML) systems struggle with high transaction volumes. The main objective of this study is to verify whether open banking catalyzes the efficiency of transaction monitoring in AML. Another objective is to analyze the current agenda of regulators in Indonesia, which is related to the Indonesia Payment Systems Blueprint 2025 and customer data security. The Delphi technique pinpointed contemporary AML compliance technologies, encompassing money laundering, Regulatory Technology, and regulatory bodies. The article delves into a comparative analysis between Regulatory Technology and financial crime, which emphasizes several actions to eradicate money laundering, such as strengthening the AML system, customer screening, and allowing cross-data sharing between institutions. In addition, this paper explores RegTech's limitations and forthcoming hurdles regarding AML compliance. The finding shows that open banking catalyzes the efficiency of transaction monitoring in AML and supports the regulator's agenda to combat money laundering with some requirements.