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Article
Publication date: 19 July 2011

Luuk Ritzen

In 2009, the research team of Unger and Nelen was requested to study the scale of entwinement between money laundering activities and the Dutch real estate sector. For…

693

Abstract

Purpose

In 2009, the research team of Unger and Nelen was requested to study the scale of entwinement between money laundering activities and the Dutch real estate sector. For this, the team developed a data mining framework to detect real estate property at risk of being part of a money laundering scheme. Part of this study involved a criminological testing of the developed framework which resulted in the statement that improvements and alterations are necessary to increase the framework's validity and reliability. This paper aims to review this framework and generate refinements.

Design/methodology/approach

This paper is concerned with a review – on the basis of data mining theory – with respect to the original framework in order to generate refinements for a future model.

Findings

In general, three major shortcomings were identified, being: the use of unspecified detection clusters; the theoretical nature of some of the risk indicators in combination with data integrity issues; and the use of speculative/arbitrary risk indicators.

Originality/value

Addressing these shortcomings in a future data mining framework will very likely increase its effectiveness and so, increase the ability of law enforcement agencies to counter money laundering activities more effectively and efficiently.

Details

Journal of Money Laundering Control, vol. 14 no. 3
Type: Research Article
ISSN: 1368-5201

Keywords

Book part
Publication date: 29 August 2018

Marc G. Schildkraut

The Supreme Court’s decision in Federal Trade Commission v. Actavis, Inc. is a challenge to conventional antitrust analysis. Conventional civil antitrust cases are decided…

Abstract

The Supreme Court’s decision in Federal Trade Commission v. Actavis, Inc. is a challenge to conventional antitrust analysis. Conventional civil antitrust cases are decided by a preponderance of the evidence. This means that conduct challenged under the rule of reason is only condemned if the conduct resulted in more competitive harm in the actual world than a world without the alleged violation. Under conventional analysis, the intent of the parties also plays only a supporting role in determining whether the conduct was anticompetitive. A holder of a valid patent has a right to exclude others practicing the patented technology. And, the patent holder is not assumed to have market power because it expended resources in maintaining exclusionary rights. Actavis creates doubts about these propositions in circumstances beyond the “reverse” payment settlement of a patent suit that may have delayed an alleged infringer market entry. This chapter explores whether applying Actavis logic to antitrust litigation can result in condemnation of practices where there is little chance of an anticompetitive effect, where the patent holder likely has a valid and infringed patent, where there is little reason to believe that the patent holder has market power, and where only one party, or no parties, to an agreement have an anticompetitive intent. This chapter also investigates whether Actavis creates new problems with standing analysis, damages calculations, and the balancing of efficiencies against anticompetitive effects. Nevertheless, the lower courts have begun to extend the logic of Actavis. This is apparent in the condemnation of no-Authorized-generic settlements.

Details

Healthcare Antitrust, Settlements, and the Federal Trade Commission
Type: Book
ISBN: 978-1-78756-599-9

Keywords

Article
Publication date: 23 August 2021

Hussain Syed Gowhor

This paper aims to inform the readers about the existing financial intelligence tools that are being used by financial intelligence units. It tries to demonstrate, with…

Abstract

Purpose

This paper aims to inform the readers about the existing financial intelligence tools that are being used by financial intelligence units. It tries to demonstrate, with the help of a literature review, what the limitations of these tools are and how these limitations hinder the potential of the financial intelligence tools for early detection of terrorist financing activities.

Design/methodology/approach

The literature review method was adopted to discuss the financial intelligence tools, their limitations and the implications of the limitations for early detection of terrorist financing activities.

Findings

It was found that although the financial intelligence tools were introduced with a view to detect terrorist financing activities early, there are some inherent limitations of the tools relating to technical design features and operational procedures that hinder early detection of terrorist financing activities.

Research limitations/implications

The existing financial intelligence tools need to be repaired by removing the inherent limitations of the tools.

Practical implications

The financial intelligence units should take into cognizance the importance of early detection of terrorist financing activities for preventing terrorist attacks and need to redesign the existing tools in such a way that make these tools effective for early detection of terrorist financing activities.

Social implications

Peace will be established in society by preventing terrorist attacks through early detection of terrorist financing activities.

Originality/value

The originality of the paper lies in identifying the limitations of the existing financial intelligence tools for the early detection of terrorist financing activities.

Details

Journal of Money Laundering Control, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 27 October 2021

Namrata Sandhu

This study aims to enlist the red flag behaviors exhibited in financial services frauds.

Abstract

Purpose

This study aims to enlist the red flag behaviors exhibited in financial services frauds.

Design/methodology/approach

A pluralistic mixed methodology was adopted in this study. Data collected via semi-structured interviews were coded, quantified and subjected to descriptive analysis to identify the most frequently exhibited red flag behaviors in financial services frauds. The relative risk of exhibition of the identified red flag behaviors was assessed by intuitively comparing the red flag behaviors identified in financial services frauds (experimental group, n = 24) with the red flag behaviors identified in a heterogeneous control sample of non-financial services frauds (control group, n = 28).

Findings

This study identifies six red flag behaviors likely to be more frequently exhibited in financial services frauds than in non-financial services frauds.

Practical implications

Results of this study can be used to develop a typical behavioral profile of a financial services fraud perpetrator. Active communication of this profile in fraud awareness training can help make fraud conspicuous in the financial services industry.

Originality/value

This study is unique because human behavior as a possible fraud indicator is an under-researched area. Further, this study examines first level of evidence and attempts an ex-post analysis of actual red flag behaviors exhibited in acknowledged fraud cases in which the perpetrator/perpetrators has/have been clearly identified.

Details

Journal of Financial Regulation and Compliance, vol. 30 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 18 May 2020

Namrata Sandhu

This study aims to attempt a gender-based ex post examination of behavioral red flags of fraud exhibited by fraud perpetrators.

Abstract

Purpose

This study aims to attempt a gender-based ex post examination of behavioral red flags of fraud exhibited by fraud perpetrators.

Design/methodology/approach

Qualitative data collected from semi-structured interviews were triangulated, quantified and subjected to statistical analysis to calculate the relative risk of exhibition of a behavioral red flag of fraud by a male/female fraud perpetrator.

Findings

This study reports the percentage of fraud cases in which male and female fraud perpetrators display particular behavioral red flags. The study also enlists the behavioral red flags likely to be more frequently exhibited by female fraud perpetrators relative to male fraud perpetrators and vice-versa.

Practical implications

Use of the results of this study in anti-fraud training is likely to make organizational fraud more susceptible to observation.

Originality/value

This study is unique because it is one of the very few studies that examine employee behavior as a potential fraud signal, establish gender distinction in behavioral red flags of fraud, and assess this phenomenon in a country other than a Western country.

Article
Publication date: 1 June 1997

Ashutosh Deshmukh, Jeff Romine and Philip H. Siegel

Statement on Auditing Standards (SAS) No. 53 requires that the audit be designed to provide a reasonable assurance of detecting management fraud. Traditionally auditors…

Abstract

Statement on Auditing Standards (SAS) No. 53 requires that the audit be designed to provide a reasonable assurance of detecting management fraud. Traditionally auditors have utilized personal, business, and economic red flags in risk analysis and audit planning. Touche Ross (1974), Coopers and Lybrand (1977), Price Waterhouse (1985), and SAS Nos. 6, 16, 17, and 53 discuss various red flags associated with management fraud. However, the authoritative literature does not provide any guidance on how to measure and combine red flags. The extant literature primarily measures red flags as “yes” or “no” type binary variables. However, red flags are fuzzy in nature and fuzzy set approach can be used to measure and combine red flags. The purpose of this paper is to provide a framework for the application of the theory of fuzzy sets to the problem of assessing the risk of management fraud using red flags. This approach can be used to capture the beliefs of one or several auditors concerning red flags and combine these beliefs to estimate the risk of management fraud. This approach can be extended to build fuzzy reasoning systems that assess the risk of management fraud.

Details

Managerial Finance, vol. 23 no. 6
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 1 August 1996

Dan C. Kneer, Philip M.J. Reckers and Marianne M. Jennings

In 1988, the US standard form audit report experienced its first major modification in 39 years. Among the objectives of the “new” report were better auditor/user…

1487

Abstract

In 1988, the US standard form audit report experienced its first major modification in 39 years. Among the objectives of the “new” report were better auditor/user communications leading to, among other things, an abridgement of auditor liability. Nearly a decade later, this issue has yet to be addressed empirically and with rigour. The empirical research reported examines the ability of the “new” audit report to reduce perceptions of auditor responsibility/liability across two instances of alleged audit failure. It is argued that a jurist’s advantage of “perfect hindsight” may mitigate the effectiveness of revised communications contained in the audit report, in instances where audit risk at the time of the audit appears high. Accordingly, consideration of environments of both high and low perceived risk were provided in a behavioural experiment conducted with 81 investors serving as subjects. Findings reveal that the revised audit report language may provide relief for auditor liability, but the presence of red‐flags, or red‐flag related environmental conditions, may exacerbate negative perceptions.

Details

Managerial Auditing Journal, vol. 11 no. 6
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 8 May 2018

Dominic Peltier-Rivest

This paper aims to investigate the extent of corruption globally, explains its social and economic consequences and introduces a model, composed of corporate governance…

2499

Abstract

Purpose

This paper aims to investigate the extent of corruption globally, explains its social and economic consequences and introduces a model, composed of corporate governance mechanisms, internal controls and red flag analyses, which organizations can apply to prevent corruption.

Design/methodology/approach

This study uses criminology theories to analyze corruption and its prevention.

Findings

The global cost of bribery alone is estimated at US$1tn annually, not including costs resulting from non-completion and deficient completion of development projects (World Bank Institute, 2004). This paper shows that an effective prevention model should include a positive work environment and ethical governance; the implementation of a compliance risk management program with fraud risk assessments; an accessible psychological assistance program for employees; regular employee anti-fraud training; the implementation of targeted internal controls such as proper segregation of organizational duties; the adoption of fair compensation levels and realistic individual performance goals; a user-friendly and anonymous reporting mechanism; and independent and regular analyses of abnormal patterns (red flags).

Research limitations/implications

This paper extends previous research by tying together disparate factors into a cohesive model for the prevention of corruption.

Practical implications

The prevention model developed in this paper assists in deterring corruption, improving internal controls, improving the likelihood of detection and reducing opportunities to perpetrate corruption. By reducing the risk of corruption, this model also helps organizations and governments reduce project costs (public spending) and improve project quality, thus promoting economic competitiveness.

Originality/value

A comprehensive prevention model is developed to help curtail corruption and its devastating effects.

Details

Journal of Financial Crime, vol. 25 no. 2
Type: Research Article
ISSN: 1359-0790

Keywords

Book part
Publication date: 28 July 2008

Christine Nolder and James E. Hunton

Jost et al. (2003) theorizes and finds that business students, on an average, hold a positive fair market ideology (FMI), which suggests that they believe in the power of…

Abstract

Jost et al. (2003) theorizes and finds that business students, on an average, hold a positive fair market ideology (FMI), which suggests that they believe in the power of market forces to reward ethical corporate behavior and punish unethical behavior; accordingly, they tend to make an implicit association between a company's financial performance relative to the stock market and the company's ethics. We suggest that audit education in professional skepticism and ‘red flaganalysis will mitigate this implicit bias when a company's relative market performance is unusually distant from a referent benchmark, such as an industry average. In a between-participants experiment involving 94 non-audit and 94 audit business students, we measure their FMI, and examine how they perceive the ethicality of a company's management based on the referent direction (above or below the industry average) and referent magnitude (relatively close to or distant from the industry average) of the company's relative market performance. The results suggest that both non-audit and audit students indeed hold a positive FMI, and they ascribe favorable ethical perceptions to company performance that is relatively close to the industry average, irrespective of referent direction. When company performance is relatively distant from the industry average, neither group of students makes the implicit link. Overall, the findings do not indicate that audit education differentially affects business students’ perceptions of corporate ethics when a company's relative stock market performance deviates considerably from a referent benchmark.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-84663-961-6

Book part
Publication date: 10 February 2020

Burcu İşgüden Kılıç

Professionals who carry out the forensic accounting profession must have an extensive knowledge of accounting, as well as an effective knowledge of law, auditing, internal…

Abstract

Professionals who carry out the forensic accounting profession must have an extensive knowledge of accounting, as well as an effective knowledge of law, auditing, internal audit, business management, psychology, crime science, and, in particular, computer technologies. In today’s digital business environment, it has become difficult to identify fraudulent transactions with traditional methods. Developments in information (data) and information technology have helped increase anti-fraud control programs and fraud research opportunities. In particular, fraudulent financial reporting disrupts the reliability, accuracy, and efficiency of financial markets in terms of existence and continuity. The forensic accounting profession has been able to improve the effectiveness of inspections by using big data techniques, data analytics, and algorithms (Rezaee, Lo, Ha, & Suen, 2016; Seda & Kramer, 2014; Singleton & Singleton, 2010).

The aim of the author, in this chapter, is to evaluate the contribution of using big data techniques in forensic accounting applications and the skills that will be provided to students while integrating these techniques in forensic accounting trainings. For this purpose, studies on forensic accounting education and their applications were reviewed. In addition, opinions were evaluated by considering the relevant literature about the importance of big data, benefits of big data, use of big data techniques, and interest shown of them.

Details

Contemporary Issues in Audit Management and Forensic Accounting
Type: Book
ISBN: 978-1-83867-636-0

Keywords

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