No industry or country is removed from the risk of corporate fraud”. That was one of the main conclusions from the annual event hosted by Depósito Central de Valores (DCV) and its subsidiary DVC Registros. The event, entitled “Cyber Security”, drew nearly 100 attendees, including authorities, members of the board, executives and representatives from participants and issuers.

The main speaker was Mexican expert Arturo Del Castillo, Associate Managing Director of Forensic Litigation Services at Kroll, who has extensive international experience in forensic and investigative accounting.

In his speech, Arturo Del Castillo stated, “corporate fraud risk has always been there, in all types of organizations and industries, and will remain so because it is committed by individuals”. The expert held that 95% of frauds are committed by individuals regarded as “normal” and only 3 to 5% by individuals considered to be “remarkably intelligent”.

According to his data, 43% of frauds are committed by Millennials, and for several reasons: deep knowledge and use of technologies; and they enter the labor market in the context of a profound ethical crisis in which immediate achievement of dreams and needs is the priority. Meanwhile, frauds that have a greater financial impact within organizations are committed by employees between the ages of 45 and 60.

As for Latin American countries, Mexico and Colombia top the list of countries affected by fraud, followed closely by Brazil and Argentina, with Chile lagging far behind.

“Chile has done very well in terms of country risk and fraud, so it stands in a much better position relative to other countries in the region”, he said. In this regard, he added that Chile’s strong and consolidated institutions and respect for the laws are very significant, despite its recent history of isolated cases of pyramid schemes.

In his opinion, the regulator plays a relevant role when it comes to the risk of fraud, but it shouldn’t be the only entity responsible for uncovering potential risks within the companies under its supervision, because that would be unrealistic. Instead, he argues that the regulator ensure that it has all the information it needs to identify potential threats and, should it find any suspicious activity, exert its authority and impose all applicable penalties within each country’s legal framework.

As for companies, they should provide all the necessary tools to make the company’s values known to its employees and stakeholders; these values should also be promoted through talks, lectures and by codes of ethics. 

“El riesgo de fraude puede ser mitigado si las organizaciones toman conciencia que existe el riesgo y, en la medida que se enfrente el problema, luego se pondrán en marcha los caminos necesarios para la prevención. Si las organizaciones se niegan a hablar de fraude, estamos mal”, sostuvo.

Also participating in a panel of experts were Osvaldo Traillanca, Senior Analyst of the Securities Custody and Settlement Division of the Superintendence of Securities and Insurance (SVS) and Claudio Herrera, Assistant Manager of Risk and Processes at DCV. The speakers addressed several issues from their respective fields, such as financial institutions’ risks of fraud and their evolution, prevention and security systems, as well as other topics related to current regulation and Chile’s situation in the matter.

DCV Noticias