Conference “Raising Awareness and Detecting Fraud”

ACFE Serbia Chapter

To support anti-fraud efforts during 2019 Fraud Awareness Week, the Association of Certified Fraud Examiners of Serbia (ACFE Serbia) held its first promotional conference on November 14th in Belgrade. The conference successfully brought together professionals with integrity, who have dedicated their long careers in public and private sectors, domestically or internationally, to detect and sanction fraud and corruption, and were always on the right side – regardless of the obstacles and challenges they faced.

In accordance with the goals of the Association, the conference was focused on spreading knowledge and raising awareness in the field of prevention of fraud and corruption, as well as on the exchange of international and domestic best practices for effective detection and prevention of fraud and corruption.

As a part of the first session dedicated to New Challenges in Fraud Detection, Tim Harvey, CFE, Director of UK Operations, Association of Certified Fraud Examiners, presented his extensive experience in emerging challenges posed by virtual currencies to fraud investigators. He explained, among other things, why crypto currencies are gaining in popularity and have extremely significant potential to disrupt traditional structures in the financial system, as well as being an increasingly important tool in the hands of organized crime.

It is concluded that crypto currencies are ubiquitous and it is a reality that cannot be changed. Regardless of the fact that crypto currencies are associated with illegal activities in the public, the technology on which they are based is very advanced and it is therefore important that we embrace them and get know them better, as soon as possible. All participants agreed and suggested that it is necessary for Serbia to recognize the use of crypto currencies through regulations, but also more importantly that employees in the financial sector and controls, as well as employees in regulatory and supervisory public institutions, prosecutors and police, are timely and adequately educated in this direction.

As an indispensable topic in the first session, regarding new challenges in fraud detection, the assistance and help provided by machine-learning and artificial intelligence arose. As traditional fraud detection techniques are complex, time-consuming and require multidisciplinary approach and knowledge of various fields, economics, finance, law, we need intelligent systems to support the resolution of the most complex cases of business fraud. Vladimir Markovic, Master of Mathematics and Programming, easily approached the participants with well-designed software that has available application logs, described business processes, and data flow, enabling the development of mathematical models that identify behavioral anomalies. The presentation presented UML techniques which can assist in the detection of behavioral anomalies, at-risk prone client, or at-risk prone employee.

At the end of the first session, it was concluded that the tendency to replace human labor with machines is ubiquitous in all areas of industry, but that it is of great importance in the area of fraud prevention, which requires the processing of large amounts of real-time data and the recognition of behavioral anomalies. Artificial intelligence and machine learning will certainly enhance fraud detection capabilities, but we will still need people who understand the processes and educate them to be more resistant to fraud.

The second session, devoted to the new challenges in conducting effective investigations, both by the competent prosecutors’ offices and those led by corporations, attracted considerable interest.

The session was first addressed by Walter Perkel, Resident Anti-Corruption Legal Adviser, US Department of Justice, OPDAT, who highlighted the importance of co-operation and coordination between prosecutors, police and liaison officers who have recently been part of special anti-corruption departments corruption in the Republic of Serbia. Subsequently, Sean Powers, an FBI agent at the US Department of Justice, spoke about the challenges of handling corruption cases through a long-standing case that has been the subject of an FBI investigation.

Following the challenges in public sector corruption investigations, Miroslav Gacesa, CFE, Director, Deloitte Serbia, spoke about the role of forensics in corporate investigations and how corporate investigations are conducted. All participants agreed that carefully chosen team of lawyers, economists, IT experts who deal with the most complex and serious crimes in the field of economy, law and professionals in other fields, is the key to the success of any corruption investigation. Each team must have professionals who are continuously educated, working on their knowledge, ready to learn, accepting mistakes and perhaps most importantly, expressing their willingness to share their knowledge. Admittedly, the concept of special corruption departments is a good team concept for any judiciary. However, the concept of these departments in Serbia had initial mistakes that must be modified in order to make investigations effective. The corpus of offenses assigned to them is not well measured in all segments, which is why there must be constructive changes that will balance the distribution of offenses, if not by gravity then by the amount of illicit material gain. In addition to the aforementioned department, all uncompleted cases from all other prosecutor’s offices throughout Serbia were commissioned to them, each within its territorial jurisdiction, to which new cases were added, ie. cases in acts committed after 01.03.2018., what is discouraging for future work. It was concluded that it is necessary to amend the law regulating the actual jurisdiction of courts and prosecutors ‘offices in order to effectively use the capacities, resources of both courts and prosecutors’ offices of general jurisdiction, as well as courts and prosecutor’s offices of special jurisdiction.

The extraordinary response of participants at the conference triggered the third session, which particularly emphasized the role of the whistle-blowers in detecting corruption and fraud. All participants agreed that their role in safeguarding the public interest was invaluable and irreplaceable. By reporting and publicly detecting illegal cases, they provide important support to the police, prosecutors, all public institutions and the private sector, thus providing invaluable important information and leading to more successful detection of fraud, corruption, organized crime, as well as more efficient and effective state and corporate investigations. Along with the assistance they provide, whistle-blowers lead to increased transparency and accountability in society as well as promote integrity in both individuals and institutions. After learning about the legal framework for the protection of whistle-blowers in Serbia, compliance with international standards, recommendations and areas for improvement, we were honored to have Borko Josifovski, a whistleblower in the case of Gradski zavod za hitnu medicinsku pomoc, and Dragan Jankovic, Fresenius Medical Care Ltd. Serbia, share with us their experiences and views on the rights of whistleblowers in Serbia. After sad and distressing stories about the uncompromising struggle that has been going on for years and which these whistleblowers are still waging before the competent courts, it was concluded that what every democratic system has a duty to provide response through high level protection against all possible consequences that whistleblowers might suffer in their lives including their families, reputation and businesses only because they have disclosed phenomena that threaten and harm public interest. Above all, this means that they must be properly informed about their rights when they raise suspicion of a threat to the public interest. They must be provided with effective, confidential and secure reporting channels. And they must be guaranteed safe legal protection against possible retaliation. Last but not least, the response of the public authorities they address must be effective, coordinated and clearly demonstrate that the organizations are functioning and are able to quickly protect employees’ rights from unjust retaliation against the employer or anyone else against whom they blew the whistle. Only in this way can the systemic assumptions for the positive motivation for the employee to blow the whistle be present. Where whistleblowers are not protected from retaliation, and where they do not feel safe to come forward and report a case of threat to the public interest, society misses serious opportunities for preventing, detecting and sanctioning breaches of regulations, which have serious public interest consequences. In addition to providing support to persons who indicate a threat to the public interest, at the end of the conference, it was concluded that it is necessary to analyze the court’s past actions in providing protection to whistle-blowers and to specify certain legal loopholes and non harmonized provisions in the Law on the Protection of Whistleblowers that do not create legal certainty for whistle-blowers and thus improve systemic assumptions that there is a positive motivation to alert employees to abuse and corruption. Only in this way – the systemic assumptions for the positive motivation for the employee to blow the whistle might be present. Where whistle-blowers are not protected from retaliation, and where they do not feel safe to come forward and report a case of threat to the public interest, society misses serious opportunities for preventing, detecting and sanctioning breaches of regulations, which have serious public interest consequences. It was concluded that in order to effectively protect whistle-blowers and effectively detect and prosecute criminal offenses, coordination between all institutions is needed to ensure their synchronized response and uniform practice. The conference brought together a large number of professionals involved in the prevention, detection and investigation of fraud and corruption, prosecutors, external and internal auditors, compliance officers, managers, public and private sector investigators, forensics and fraud prevention specialists in all fields.

We are at your disposal for any additional questions.

It was our pleasure that you participated in the conference.