Clare Rewcastle Brown to Discuss Money-Laundering Controls Learned from 1MDB Scandal

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Sarah Hofmann
ACFE Public Information Officer

“I think this whole offshore financial structure that’s been allowed to grow like a canker … the whole thing’s got out of control,” said investigative journalist Clare Rewcastle Brown in an interview with the Association of Certified Fraud Examiners (ACFE). 

Rewcastle Brown founded The Sarawak Report and Radio Free Sarawak in 2010 to disseminate news that concerned the Sarawak region of Malaysia and eventually, news surrounding the emerging 1MDB (1Malaysia Development Bhd) scandal. In August 2015, a warrant for her arrest was issued by a Malaysian court for "activities detrimental to parliamentary democracy" and the "dissemination of false reports."

“I think we’re seeing a swing of the pendulum and I think 1MDB’s just kind of cropped up perhaps at the right place at the right time … governments across the world have started to realize that they’ve lost control and populations have lost patience,” she said.

Rewcastle Brown will address anti-fraud professionals from across Europe at the 2017 ACFE Fraud Conference Europe in London, March 19-21. Despite having an arrest warrant issued for her by a Malaysian court, Brown remains optimistic that corruption on a global scale can be defeated. She said, “I do think we’re seeing a lashback and 1MDB is going to be just one example of enforcement agencies hitting back.”

Despite not being able to attend the 2016 ACFE Fraud Conference Asia-Pacific last November in Singapore due to safety concerns, she is committed to speaking in-person at the conference in London. She plans to lay out the intricate timeline of the 1MDB scandal that allegedly began in 2009 and runs through present day.

1MDB is currently being investigated by Swiss, Singh and U.S. authorities. In a question-and-answer session after her prepared remarks in Singapore, Rewcastle Brown addressed what controls she thought could help prevent this type of large-scale money laundering. “I think this case is really an opportunity to hold banks and players in these actions seriously to account. And to make the actors who have broken the rules pay the penalty, seriously. [They should be] absolutely exposed, shamed and embarrassed because we need to put off future, potential situations like this arising again,” she said. “I think that’s the best we can hope to come out of this. By showing at last, that the financial regulators have teeth and that they’re catching up to the global criminal element who have been using our offshore system and far-too compliant financial organizations. If we can get ahead of them, maybe that’s the best way to deal with this particular problem.”

Find out more about the upcoming 2017 ACFE Fraud Conference Europe, and register by February 17 for early registration discounts, at FraudConference.com/Europe.

Former Enron CFO to Speak on Gray Areas at ACFE Fraud Conference in Dubai

SPEAKER INTERVIEW

Interview with Andrew Fastow, former Enron CFO and convicted fraudster,* and keynote speaker at the upcoming 2017 ACFE Fraud Conference Middle East, January 29-31

What are you most hoping attendees will take away from your presentation?
This is my first time to speak in this region, so I am looking forward to the opportunity. I am hoping attendees will take away that there is more than one way to think about fraud. Fraud can often occur even when people don’t realize they are committing fraud, and this is something that fraud examiners need to be thinking about. It’s not just about bribery, embezzlement and faking numbers or accounts, but about certain behaviors. I hope people will gain some insight into the behaviors that can lead to fraud.

Why do you think the Enron scandal and message you share remains relevant today?
It remains relevant because of its size and its magnitude, and also the spectacular way and speed with which it imploded. It’s scary because almost no one saw it coming. It is also particularly relevant today because of the human behaviors exhibited there; they are universal human behaviors. Some people are just better at controlling them than others. It really is a story about human nature more than a story about business. I think that’s why it resonates with people. Almost everyone is guilty of this type of behavior at varying degrees and at some point professionally or personally. A comment I often get after my presentations is, “I could think of a dozen situations I have been in where I rationalized things, and now I am second guessing what I did.”

When you are delivering your presentation and sharing your story, are you most trying to highlight the controls that were not in place or red flags missed, or do you think you could potentially sway executives to think twice before crossing blurry ethical lines?
I hope that people walk out of my talk confused. I am not there to lecture them on what the answers are. I want them to walk out thinking, “Whoa, I was thinking everything was black and white, but there really are many shades of gray.” It is not just the black area that leads to fraud, but the gray area as well.

Read more about Fastow and other keynote speakers at ACFE.com/MiddleEast.

*The ACFE does not compensate convicted fraudsters.

Webinar: How Our Implicit Biases Affect Investigations

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Emily Primeaux, CFE
Assistant Editor, Fraud Magazine

Imagine you’re driving a car and suddenly a squirrel darts out in front of you. What is your immediate reaction? You’ll swerve or break — or you may even accelerate. Do you think about swerving or braking in the split second that the critter crosses your car? 

Let’s continue with the car example, but now you’re deciding to buy one. You spend time researching makes and models, and most likely, prices. Do you actively think about doing this research before going to the dealership?

These are the two examples that Bret Hood, CFE, Supervisory Special Agent at the FBI, used to explain the two systems of thinking as described by Daniel Kahneman in his book, “Thinking, Fast and Slow.” Hood described these scenarios in his top-rated session, "Why Let the Truth Get in the Way: How Our Implicit Biases Affect Investigations,” at the 27th Annual ACFE Global Fraud Conference in June. You can catch a rebroadcast in webinar format tomorrow at 11 a.m. EST. (And, you can also earn any lingering ethics CPE you need to complete for 2016).

In the first example with the squirrel, you’re reacting with a routine behavior that you don’t even think about. This is system one. In the second example at the dealership, you’re thinking before you act. This is system two.

“You spend more time in system one,” said Hood. “And that’s where your blind spots are.”

Hood went on to explain that these blind spots are implicit biases. Basically what this means, he explained, is that no matter what happens around us, our minds are consciously evaluating stimuli and making choices. These biases are going to impact your experiences — you can be primed in certain ways.

This happens because system one is far more efficient than system two. Before you have a chance to assess any situation, system one is leading you to a decision. And the more experience we have, the more likely we are to fall victim to implicit biases.

“If our implicit biases play a role in reaching the conclusion, this has a profound effect on the rest of the investigation,” said Hood. In a fraud examination, if you decide ‘I know this person did it,’ it’s hard to step away from that idea.

Hood explained that acknowledging that you might be susceptible to implicit biases will help you notice when your behavior and actions are being influenced by those same biases. “If our goal is to find the person who is responsible for the crime, acknowledging our own biases and finding ways to mitigate them will lead us to the person we truly seek.”

Find out more about Hood's webinar, which will air tomorrow at 11 a.m. EST, as well as three other top-rated speakers to be featured over the next three weeks in the ACFE's All-Star Webinar Series.

RECAP: Fraud Week's Top Free Resources

AUTHOR'S POST

Mandy Moody
ACFE Content Manager

I can't even begin to describe the amount of International Fraud Awareness Week activity we have seen on social media this year. I guess that was my way of beginning to describe the amount of activity we saw. With more than 10 million impressions on Twitter and numerous infographics and blog posts, this year's reach has surpassed previous years by millions. 

So, I am left with two tiny words to express the overwhelming sense of support you have all spread over the last five days. Thank you. Thank you to the individuals creating one-page documents. Thank you to the organizations officially supporting the cause. And, thank you to the many people who came together from different industries to host events. 

Here are just a few of the resources I caught this week that I hope you can use in your own efforts moving forward:

• Identity Fraud Prevention Playbook (LexisNexis)
• 7 Surprising Ways to Create an Information Security Culture (ShredIt)
• Infographic! Spear-Fishing Attacks: One Click Can Change Everything (Symantec)
• Interactive Data Analytics Tests (ACFE and EY)

Again, thank you to everyone that participated in Fraud Week this year. There are so many more resources than the ones I highlighted above, so take some time and search for #FraudWeek on Twitter and Facebook. We will meet again in 2017!

Utilities United Against Scammers to #StopScams

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Page Leggett, Freelance Writer
On behalf of Duke Energy

When a scammer called Florida pet clinic operator Cindy Evers last year and demanded immediate payment on an overdue Duke Energy electric bill, it sounded real.

“They knew my account number and gave me a figure that I owed that’s close to what I usually pay on my electric bill,” Evers said. She paid, even though, in the back of her mind, she knew her payment wasn’t late.

“I have pets under sedation, and I’m taking care of animals. I think I just panicked, thinking they were going to shut my electricity off. I did what they told me to do.”

Evers lost $900 because the caller was a fake.

The scam that duped Evers has been plaguing utility consumers across North America for several years, robbing them of millions. To protect customers, utilities have increased their communication efforts, sending information directly to customers and encouraging local TV and newspapers to warn citizens about the scam, how it works and what people should do and not do, if they are ever targeted.   

Those individual awareness efforts will grow exponentially this month as approximately 40 utilities and energy industry organizations from across the United States and Canada have joined forces to recognize the first-ever North American Utilities United Against Scams Day on November 16, 2016.

Duke Energy, who serves customers in Florida, Indiana, Kentucky, North Carolina, South Carolina and Ohio -- and Xcel Energy, who serves customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin -- are among the coalition members.

Jared Lawrence, Duke Energy’s vice president of revenue services and creator of an online database that captures real-time customer reports of scam activity, says he regularly reviews reports from the database and is at times, astounded by what he reads.

“Scammers have gotten remarkably bold, and even the most sophisticated consumers are falling victim,” Lawrence said. “The good news is Duke Energy’s efforts to raise awareness are working, and today about 90 percent of customers who get a call and report it say they didn’t fall for the scam.”

Find more resources and view of list of International Fraud Awareness Week supporters like Duke Energy at FraudWeek.com.