MODUL KIAR 2023 - 7 WHITE-COLLAR CRIMES.pptx

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1. INTEGRITY & ANTI CORRUPTION COURSE KIAR Kementerian Pendidikan Tinggi 2.0 Building a Generation with Dignity, Integrity and Corruption Free ” “

2. WHITE-COLLAR CRIMES 7 Module

3. "According to the leading audit firm PricewaterhouseCoopers (PWC), there is an INCREASE in the white-collar crime index in this country in 2018.” Datuk Seri Akhbar Satar , President of Transparency International Malaysia Astro Awani, 26 November 2018 "25,000 investigation papers involving commercial crimes were opened nationwide involving losses amounting to RM6.2 billion for the period from January to December 2019." "The police arrested 15,000 individuals involved in the crime" Datuk Seri Mohd Zakaria Ahmad, Director of Bukit Aman Commercial Crime Investigation Department BH Online, January 30, 2020 Why is it important for us to know?

4. White-collar Crimes This term was introduced by the American sociologist, Edwin Sutherland in 1939. "A crime committed by a person of respectability and high social status in the course of his occupation" - Edwin Sutherland, 1939 - Edwin Hardin Sutherland 13 Ogos 1883 – 11 Okt. 1950

5. White-collar Crimes General meaning - non-violent, financially motivated crime. Committed by professionals in the public and private sectors.

6. White-collar Crimes? Generally, professionals wear white shirts and ties. Why called

7. Blue-collar Crimes vs White-collar Crimes Crimes committed by lower social groups cause injury and damage to property.

8. White- collar Crimes E mbezzlement Cyber ​​crime Fraud Accounting fraud Ponzi scheme Corruption

9. White-collar Crimes Case studies

10. - Study by ACFE in 2013 - USD3.7 trillion Every year, businesses lose 5% of their profits due to fraudulent activities . Worldwide, the total loss is USD3.7 trillion.

11. Case 1: Enron Scandal In 2001, the energy giant Enron went bankrupt due to fraud in its financial reporting. This Enron auditor had his license revoked. As a result of the Enron scandal, Arthur Anderson was severely affected and was no longer the world's largest firm.

12. Case 2: Collapse of Barings Bank Barings Bank - the oldest bank in the United Kingdom. Once owned the account of Queen Elizabeth II. Bankruptcy in 1995, after 233 years of operation. Cause - fraud, illegal speculative activities by his manager, Nick Leeson. Leeson caused Barings to lose US$1.4 billion. Leeson was jailed for 6½ years.

13. Bernard Lawrence Madoff (born April 29, 1938) - Ponzi Scheme criminal legend. Also known as a Pyramid Scheme. Madoff once held the position of chairman of the National Association of Securities Dealers Automated Quotation (NASDAQ). 2008 - Madoff is arrested, $65 billion is in his account. Madoff admitted that one of his subsidiaries ran a massive Ponzi Scheme. Case 3: Bernie Madoff's Ponzi Scheme

14. On March 12, 2009, Madoff (71 years old) pleaded guilty to 11 charges. Madoff was sentenced to 150 years in prison. He was also ordered to repay $170 billion to his investors. While in prison, two of Madoff's children died. One committed suicide and the other due to cancer.

15. Aman Shah – 24-year-old executive at Hock Hua Bank, earning RM1,800 per month. In 1990, Aman stole 1 cent every day from bank customers’ accounts. Money was deposited into a proxy account at another bank. He lived in luxury. Has 6 supercars, i.e., Lamborghini Countach (RM1.3 million), Mercedes Benz 300SL (RM502,000), Mercedes Benz 300E (RM192,000), Porsche Carerra 928 S4 (RM638,000) and BMW 329i (RM68,000). Case 4: The story of the 1 cent thief

16. Aman Shah displayed his 3 cars at a showroom, Bukit Bintang (June 1990). He once appeared live on the show Sekapur Sireh (TV3), sharing the advantages of each of his cars (June 3, 1990). The former manager became suspicious after watching the show and filed a complaint. Aman Shah was charged in court for fraudulent activity amounting to RM4 million. He was found guilty and imprisoned for 5 years.

17. The pioneer of the Ponzi scheme in Malaysia. Popular around the 80s, in Taiping, Perak. Founded by Pak Man Telo , a former journalist. This scheme uses new investors' money to pay dividends to early investors. Pak Man Company - Pestama Enterprise Accept public investment, promise high returns of 10% every month. 50,000 investors, total investment of RM99 million. Case 5: Pak Man Telo Scheme

18. Year 1989 - Pak Man was arrested by Bank Negara. He was accused of illegally accepting deposits from the public. His scheme became unstable. Investors claimed their money. There was a commotion at Pak Man's residence. Climax to investors' anger - Pak Man's son was kidnapped for ransom. Pak Man was found guilty by the court and imprisoned for 2 years.

19. THE LATEST CRIMES White collar crime & trafficking

20. Masterminded by Taiwanese and Chinese syndicates - using international lines from Hong Kong and local. The 4 most popular modus operandi: win a lucky draw. lie about a kidnapping and demand ransom. impersonate a police officer, court official or other government agency. posing as an official of the National Bank or a commercial bank. MACAU Scam

21. Lucky draw The victim received a phone call - informing the victim that he had won a lucky draw worth millions of dollars from a Hong Kong and Macau company. The syndicate provided a phone number to contact if the victim wanted to claim the prize. Once the victim agreed, the victim was required to pay tax and insurance by depositing money into a specific account to claim the prize. After the transaction was completed, the caller failed to be contacted, and the promised prize money was not delivered . MACAU Scam ( 1 )

22. 'Spoofing' police officers / government agencies The victim received a phone call from an individual claiming to be a court and police officer. The victim was allegedly involved in illegal activities (such as ah long, secret societies and drug trafficking) The victim was asked to transfer money from his account to a specific account, supposedly to avoid the victim's account being frozen by the authorities. POLIS ( scam ) MACAU Scam ( 2 )

23. 'Spoofing' official of central bank or commercial bank (credit card) The victim received a call from someone claiming to be a bank officer. The victim allegedly failed to make a credit card payment. The victim was instructed to contact someone, supposedly an official of Central Bank of Malaysia (BNM), to avoid having his name blacklisted or his bank account frozen. The victim was asked to transfer money to a specific account through e-banking or through a cash deposit machine (CDM). MACAU Scam ( 3 )

24. Kidnapping and demanding ransom The victim received a phone call from someone who claimed that their child or relative had been kidnapped. The victim was tricked into transferring the ransom money to a third party account number provided by the caller (syndicate). Other tricks / tactics - alleged hit and run and failure to pay bank / financial institution loan debt. MACAU Scam ( 4 )

25. Victims met over the internet and then fell in love. The suspect claimed to want to go to Malaysia because he wanted to marry the victim. Upon arriving in Malaysia (supposedly), the suspect/syndicate member contacted the victim and claimed that the authorities had detained the suspect for several offences. The victim was required to pay a sum of money to allow the suspect to be released. Love scam

26. The victim met the suspect through social media. The suspect convinced the victim that he had fallen in love with the victim. The suspect intended to send a 'package' to the victim as a sign of love. The victim was contacted by someone claiming to be a customs officer or delivery service company - informing them that the package sent to the victim had arrived. The victim was ordered to pay tax or insurance because the package was found to contain undeclared money/valuables. The victim was only aware of being cheated when the promised item was not delivered, even though payment had been made. Parcel scam

27. Caused by the customer's negligence for disclosing the password to a third party. The victim received an SMS purporting to have won a cash prize. To claim the prize, the victim is instructed to open an internet banking account and then follow the instructions given. The instructions include disclosing the password and making the syndicate's mobile phone a medium to receive bank verification code SMS. E-banking scam

28. Syndicates trick victims into revealing bank account or credit card information. The syndicate sends fake e-mails pretending to be sent by a legitimate party (banking institution). The email asks the victim to disclose personal information. some cases redirect victims to fake websites that resemble legitimate websites. Phishing

29. Fraudulent applications The syndicate made credit card applications by forging identity cards, salary slips and employer confirmation letters. The syndicate turned an empty, uninhabited house into a postal delivery address.   Credit card fraud ( 1 )

30. Account takeover / Identity theft The involvement of 'insiders' in financial institutions. They give all account holder information to the syndicate. The syndicate will contact the 'Card Centre' introducing themselves as the owner of the card and make a report about the loss of the card. Syndicate will make a change of address application. Once approved, the bank will replace the card that was reported lost without the original cardholder's knowledge. A new card will be posted to the syndicate address. Credit card fraud ( 2 )

31. Non-received issue fraud Credit card delivery requested by the customer is stolen or intercepted. Postal workers are most likely involved. The original card falls into the hands of the syndicate, which maximises purchases on the credit card. Cash withdrawal will occur if there is an ATM PIN on the original credit card for cash withdrawal.   Credit card fraud ( 3 )

32. Recognise the fraudster profile

33. KPMG : Global profiles of the fraudsters The report was published in May 2016. Study of 750 fraudsters worldwide. Study period March 2013 - August 2015. Identify fraudster profiles - involve fraud and malpractice in the organisation

34. GENDER Men (79%) AGE 36 - 55 years old (68%) 26 - 35 years old (14%) Over 55 (8%)

35. The majority of fraud is the act of 'insiders', colluding Company employees (65%), most have worked for more than 6 years Former employees (21%) 62% of fraud incidents are committed by more than one person (collusion)

36. Fraud is committed by individuals who hold positions and are respected Executive / Non-Executive Director (34%) Manager (32%) Staff (20%) The majority of fraudsters are respected individuals in the organisation (38%)

37. Internal control weaknesses cause fraud to be committed in the organisation (61%) The main cause of fraud?

38. The most frequent frauds are: Misappropriation of assets (fraud in procurement) - (47%) Fraud in financial reports - (22%) Technology becomes an assistant (or enabler) for fraud to be committed.

39. Fraud detection Complainant / whistleblower report (43%) Examination of the company's management - for example, through an audit (22%) By accident (14%)

40. Because of personal gain and greed Because he has the ability Organisational culture To reach the target - hide losses to receive bonuses Why is fraud committed?

41. Why is fraud committed? To achieve the target - hide losses to protect the organisation To meet budget targets - hide losses to stay in the organisation. Other motives (loss of stakeholder trust, avoiding legal action, for publicity, for ratings) Other motives than those mentioned before

42. It is one of the white-collar crimes. The effects of bribery are more serious. BRIBERY

43. ACTIVITY

44. https://www.youtube.com/watch?v=FJWG7Qv0LZs BANK FRAUD FATHER AND SON SCHEME Watch the video (7.33 minutes) Discuss the nature of the offence and how it was committed . Discuss the effects of this crime.