Fraud Prevention and Detection Policy - Know Your Compliance Limited

A fraud prevention and detection policy is an internal document used by businesses to record their obligations, objectives and controls for identifying and preventing fraud within the company. For best practice, the Anti-Fraud Policy should co-exist alongside your anti-bribery and corruption and anti-money laundering framework.

The Fraud Act 2006

The Fraud Act 2006 (‘Act’) separates the offence of fraud into three different categories. The Act also defines what constitutes fraud and what the relevant penalties are for offences commited. If you are writing an anti fraud policy, you will want to address the 3 fraud offences individually. Set out what they are, identify how they could happen in the workplace and set out your objectives and measures for preventing such instances.

Fraud by false representation.
Fraud by failing to disclose information.
Fraud by abuse of position.

What is Fraud?

Sounds like a simple enough question doesn’t it!

However, in business fraud spans a wider scope than a single act. Fraud within a company is any wrongful or criminal deception that is intended to result in financial and/or personal gain. It is carried out with the intention of deceiving others and usually involves falsely representing facts.

You may be reading this quick guide to understand what a fraud prevention and detection policy is or how to write one for your company. If so, it is important to remember that false representation can work in 2 ways. Making false statements or knowingly giving innaccurate information or advice is the main one we all think if. However, the deliberate withholding of essential information is also classed as misrepresenting under the Act.

The Purpose of a Fraud Prevention Policy

So what do you want your fraud prevention policy to accomplish? The aim of any policy is to set out intent, scope and objectives. The policy is an internal working document to guide and inform employees, clients, regulators and stakeholders. It tells them that you recognise what fraud looks like within your company and you have a plan for preventing it.

The objectives you set our in your policy will largely depend on your business size, scope, type and industry. However, there are a number of responsibilities that all companies have when complying with the Act.

Over on the right, we have listed some of the generic objectives that you can add to your fraud prevention policy. This is by no means an exhaustive list, but it will help you to see the type of measures and controls you can use.

You should make it clear in your policy statement that you will not tolerate fraud in any form and ensure that all employees are aware of their responsibilities. Understanding situations or instances that could give rise to, or perpetuate fraud is one of the key controls in fraud prevention.

Anti-Fraud Policy Template

Why not join 11,000+ firms already using our policies to improve their regulatory compliance? Our Fraud Prevention Policy Template pack also contains a Whistleblowing Policy Template, Fraud Response Plan Template and an Excel based Fraud Risk Assessment Template. It’s fully customisable and available for instant download.

Sample Objectives for Anti-Fraud Policy

Define and implement an Anti-Fraud Policy
Review policies and procedures against the Fraud Act to ensure effectiveness and compliance.
Appoint a Fraud Officer to oversee compliance of the policy.
Draft and implement a Fraud Response Plan.
Carry out a gap analysis and fraud risk assessment
Establish reporting lines and provide management information on the fraud risks and associated issues.
Put a training program into place to ensure all employees are aware of the Anti-Fraud Policy and know their responsibilities under the Act.