Analyze This and That

Critical Analytic Techniques


By Marilyn B. Peterson, CFE, CCA, ACFE Fellow

As fraudsters become more proficient, CFEs must be able to use equally sophisticated fraud examination skills. Here's how you can stay on top of your game with criminal analytic techniques.

A young man, who was living with his parents, was cashing legitimate checks for more than $100,000 through a retail check-cashing company. Criminal analysts reviewing Currency Transaction Reports spotted the checks and investigators opened a case. Within 90 days, the suspect had pled guilty to investment fraud and first-degree money laundering and then provided information that led to others receiving similar charges. He was encouraging people to invest in a non-existent venture. Without the use of analysts, the fraud wouldn't have been found and quickly completed, and many other investors would have lost their savings.

Fraud examination is a challenging endeavor. Fraudsters use advanced technology and methodologies for planning and committing sophisticated frauds. Your efforts must be more sophisticated just to match their pace. Therefore, more fraud examiners are employing analytic techniques to help solve complex cases.

Criminal analytic techniques began developing in the 1970s when the California Department of Justice contracted a private firm to develop analytic training in conjunction with the development of organized crime and criminal intelligence units within law enforcement. By the 1980s, it was apparent that crime equals money and analysts were deployed to fraud, narcotics, money laundering, and corruption units as well. No longer could departments rely solely upon confidential informants, surveillance, and undercover operations to give them direct evidence of crime; analysts were needed to trace and show the profits of crime.

Criminal analysis is also taught to private sector analysts, detectives, managers, regulatory professionals, and prosecuting attorneys. Analytic techniques are an important addition to every fraud examiner's toolbox. Though much of the material here may be basic, it's often the simplest forgotten procedures that foil a fraud examination.


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