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Avoiding White-Collar Crime: Tips for Business Owners and Managers

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When thinking about business-related thefts, most managers and business owners consider shoplifting, burglaries, and robberies the main source of loss. Nobody wants to think about his own employees engaging in such acts, but studies show that employees cause over 40 percent of all business related theft. According to CNBC, businesses in America lose over $50 billion due to dishonest employee behavior. As new technology emerges, experts expect this figure to increase over time. Employee theft is not just limited to a retail associate who slips a $20 out of a register or a dock worker who steals a box of products. White-collar crime is a much costlier problem of which both small business owners and corporate executives need to be aware. This way, they can implement best practices to ensure the safety of their companies.

What Is White-Collar Crime?

Have you ever heard a breaking news story about authorities arresting a corporate executive for stealing millions of dollars from his or her employer? Perhaps the executive set up bogus accounts at foreign banks, or manipulated investors out of their hard-earned money. These are examples of white-collar crimes that can cost a company its reputation, and cost consumers a lifetime of savings.

The FBI defines white-collar crime as theft, fraud, and money laundering activities that business professionals and government officials commit. It is considered to be a non-violent form of crime, but can destroy businesses of all sizes. White collar crimes are typically committed by trusted employees who can access financial and business records without criminal detection.

Types of White-Collar Crime

White-collar crimes occur in many different forms. Here are some of the most common types for business owners or managers to watch out for:

  • Bribery: Bribery is the act of giving someone something, or doing a favor for someone, with the expectation of something in return. Think of the employee who will turn a blind eye on unethical businesses practices when they are given a large amount of “hush money” for their agreed upon silence.
  • Embezzlement: Embezzlement occurs when an employee converts money from a business or client account for his or her own personal use. The employee will typically withhold small amounts of money from multiple different sources in an effort not to raise red flags. It is a crime that is most often seen with those in charge of investment accounts, trust funds, and other financial accounts.
  • Money laundering: Money laundering is the act of manipulating illegally obtained money from activities such as drug sales, gambling, theft sales, etc. and making it look as though it was obtained via legal transactions. The criminal will usually weave the money through several transactions so that the document trail looks legitimate.
  • Fraud: Fraud is the use of deception to obtain goods and services. An employee can use legitimate business practices to illegally gain money or information from clients and convert it for their own use.

What You Can Do to Prevent White Collar Crimes at Your Business

In order to prevent white-collar crimes from occurring at your company, management should put checks and balances into place to hold employees at all levels accountable and to ensure that business is conducted in an ethical manner.

  • Routine audits: As the saying goes, “Don’t let the fox guard the hen house.” Implement routine cash and materials audits within your company so that a single person, or group, does not have too much control over the books and finances. Utilize both internal auditors as well as third party auditors. Audits should be conducted at random times through the year so that they are not expected.
  • Access control systems: Employees should only be provided with access to programs, files, and areas of the building that are required for them to do their jobs. Alarm codes and program passcodes should all be user unique and never shared among employees.
  • Anonymous reporting: Provide all employees with a way to file complaints and report ethical/criminal behavior anonymously. The most efficient way to do this is to register with a third-party anonymous reporting agency where employees can call a hotline to voice their concerns. The agency will then send a notification of the concern to the appropriate executives within your company for investigation and follow up.
  • Zero tolerance policy: Implement, post, and enforce a zero tolerance policy for theft and fraud related activities within the workplace. The best defense to white collar crime is a good offense. Make the zero-tolerance policy known to employees, and share what the ramifications of such actions would look like.

If you would like more information on white-collar crime, or suspect you or your business may be a victim of white-collar crime, contact us or call us at (727) 269-5300.

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