British Think Tank: Paying Whistleblowers Could Be ‘Pivotal’ in Preventing Fraud
A British defense/security think tank says the country should pay whistleblowers to prevent fraud.
The Royal United Services Institute (RUSI) has published new research arguing that a whistleblower payment program could play a “pivotal role” in combating white-collar crimes.
“Having an insider who can provide the emails and can provide the evidence just changes the game,” Eliza Lockhart, who conducted the research, told the Financial Times in an interview published Sunday (Dec. 8).
“But it means that you need to get over the idea that a whistleblower is going to be this kind of moralistic hero that we put on a pedestal,” she added. “That perception is not helpful for investigations, and it is not fair on whistleblowers.”
According to the FT, British financial regulators considered paying for information a decade ago following the 2008 financial crisis, but determined such an effort wasn’t necessary.
The report said tips from the U.K. are one of the largest sources of intelligence — outside of the U.S. — for the Securities and Exchange Commission (SEC), which has paid its informants since 2011. Last year, the regulator issued its biggest-ever whistleblower payout, $279 million.
However, just 0.5% of whistleblowers who contact the SEC have gotten financial compensation, Lockhart said, countering the belief that it is common for people to get millions of dollars for assisting the watchdog.
In other fraud-related news, PYMNTS wrote last week about the evolution of BEC (business email compromise) fraud, which at one time relied on impersonating high-ranking executives or key suppliers, with simple email requesting a wire transfer enough to trick unsuspecting employees.
The fraud has since become more nuanced and multilayered thanks to advanced technologies like artificial intelligence (AI).
“Fraudsters … are adept at hacking email servers and manipulating employees into granting them access,” nsKnox COO Nithai Barzam told PYMNTS in an interview.
“Once they are in, they can easily mislead accounts payable (AP) and accounts receivable (AR) staff. To put it in simple terms: Today, it’s just too easy to target corporate payments. Therefore, organizations must protect all payment types using technology-driven validation of payee and account details while making sure all payment-related data and files are protected in a way that they cannot be tampered with.”
The fight against this fraud increasingly requires a holistic approach, integrating technology, processes and employee training, that report added, with many risk management leaders stressing that the first line of defense is an organization’s own employees.
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