B2B Payments

Standard Chartered Woes Extend To Expense Account Fraud

Standard Chartered’s ongoing investigation into various forms of misconduct has uncovered expense account fraud of an eye-popping nature. In the meantime, the AFP finds that 78 percent of organizations were hit by payments fraud last year, and as always, fraudulent schemes abound, as some isolated cases show.

There are deep layers to Standard Chartered’s investigation into misconduct at the international bank. The company, headquartered in the U.K., has headlines swirling over various investigations into misconduct, harassment and other transgressions of workplace behavior.

But of course, for our purposes, the focus is on payments – and here there are investigations, too, specifically into expense account fraud. Bloomberg reports that the bank is looking into fraud that may have occurred at investment banking and private banking units across Africa, Asia and the Middle East.

There are “dozens” of cases of such fraud across those regions stretching back three years, said the newswire. In some cases, employees at a Hong Kong location spent tens of thousands of dollars, accrued via corporate cards, on gifts and entertainment, including Louis Vuitton bags. The expenses had been approved by management, with little in the way of receipts or justification, according to sources. In one case illustrated by the newswire, a personal assistant who earned about $50,000 annually spent as much as $380,0000 in corporate expenses over two years.

In an illustration of just how widespread payments fraud can be, consider the 2018 AFP Payments Fraud Survey, underwritten by JPMorgan, which a few weeks ago found that such activity hit a new high last year. The tally? Roughly 78 percent of all organizations experienced payments fraud – and the Association of Financial Professionals (AFP) found some gradations in that fraud.

The study showed that checks are the most preferred conduit of fraudulent activity, with 74 percent of respondents reporting that type of attack. The next most prevalent activity was wire fraud, at 48 percent, followed by corporate fraud at 30 percent. As for other avenues, business email compromise showed up mightily, experienced by 77 percent of organizations in 2017. The survey showed that 65 percent of payments fraud had been committed by individuals outside of the firms.

And in one of the more egregious examples of payments fraud this past week, it was reported in North Carolina that a 23-count criminal indictment was returned by a federal grand jury situated in Asheville versus Wanda Skillington Greene, who had served as Buncombe’s county manager.

Under the terms of the charges, Greene’s indictment stated that she had committed wire fraud, federal program fraud and money laundering activity. The grand jury stated that she was behind a $2.3 million ruse wherein she had engineered the purchase of whole life insurance policies for herself and also county employees. Those funds had been misappropriated by the state.  

The scheme began in 2015 and continued into last year, and in June of last year she retired. Upon retirement, Greene liquidated her life insurance policies for as much as $395,000. Each of the fraud counts carries penalties of up to 20 years in prison and $250,000 in fines.

This is not the first time Greene has been charged with misuse of funds. The former government employee and her son, Michael Greene, were under federal indictment four years ago for misusing government credit cards to the tune of $200,000 in improper purchases. Those charges are still pending, according to the website morningsidemaryland.com.

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