A version of this article was first published in ThoughtLeaders4 FIRE Magazine.
Investigating fraud, bribery or corruption in higher-risk jurisdictions is challenging. These investigations require a unique skill set and access to a trusted local network.
Before beginning work, the investigation team should work through a few key considerations to achieve the investigation’s objectives while ensuring the safety of all involved:
- Initial intelligence gathering and planning
- On-site vs remote work in light of security concerns
- How to counter potential information leakage, especially when dealing with improperly kept books and records
- The gathering of corporate and ultimate beneficial owner (UBO) information in offshore financial centres (OFCs)
Key considerations
Initial intelligence gathering and planning
The starting point for any successful investigation is understanding the information landscape. Each country and case presents a unique political, cultural, linguistic, legal and economic environment. Gathering initial intelligence and planning effectively in that environment requires a map built from knowledge and experience.
Alongside local legal support, forensic accountants, technology support and business intelligence, the investigation team should also seek specialist advice on security risks and local and national politics.
Addressing risks of intimidation or violence
Where there is a significant risk of intimidation or violence, the team must consult with security experts and obtain a security risk assessment to determine the appropriateness of an on-site investigation. If necessary, on-site investigations may require a physical security detail for the team when travelling to and from the site.
The safety of whistleblowers and witnesses is also critical, as they may face intimidation, retribution or physical harm. The investigator should arrange safe, off-site locations for conducting detailed discussions or interviews. Appropriate protocols should be in place to pre-empt any coercion of whistleblowers and witnesses into sharing details of the investigation.
If a security assessment deems an on-site visit too risky, evidence collection, analysis and relevant interviews can be handled remotely, with certain limitations.
Avoiding information leakage and obtaining accurate books and records
Books and records in offices and sites in higher-risk jurisdictions often are not kept in line with best practice standards for document retention and digitalisation.
For example, a lack of data-validation protocols can result in digital records not being properly authenticated, increasing the risk of relying on inaccurate or tampered data during an investigation. Ensuring potentially critical evidence is not contaminated or deleted due to an information leak or tip-off is fundamental at every stage of the investigation. To mitigate this risk, the investigation team should determine a strict need-to-know list and set of communication protocols.
Investigators should make email data and legal hold requests to local IT via general counsel. These should be framed as routine, internal reviews and contained inside larger, randomised samples to avoid raising suspicion. This masking technique will help conceal the purpose of the request.
Obtaining company records and UBO information in higher-risk countries and OFCs
Investigations in higher-risk countries inevitably identify illicit funds exiting the country via transactions with offshore shell entities supported through proxies. Investigators can use open-source intelligence and proprietary databases to identify links between the subject of an investigation, the shell entity and the proxy. In some cases, this information is available through third-party sources, such as trade databases.
Acquiring basic corporate information in an OFC often requires attendance at the local registry. Successful investigators will leverage their local networks to manage this. Requests for facilitation payments to speed up administrative processes are also common in many markets. However, oOrganisations risk paying potentially illegal facilitation payments unless they have an investigation team with access to a trusted local network.
The director or corporate officer of a shell entity in an OFC is often a proxy used to hide the UBO. Investigators must determine whether the UBO and the subject of the investigation are the same person or connected entities. Using human-source intelligence, investigators can uncover links between the subject of the investigation and the proxy in place at the shell entity, which they can then use to search and review documents, books and records to identify any corroborating evidence.
Planning and adaptation: the key to a successful investigation
Conducting investigations in countries with high levels of perceived corruption and security risks is undoubtedly complex. In addition to strong investigative credentials, the investigation team will also require access to appropriate security consulting and trusted local intelligence networks in higher-risk countries.
Ultimately, success depends on meticulous planning and an investigation team that can adapt when circumstances change.