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In a Financial Fraud Investigation, It Pays to Follow the Digital Footprint

Fraudsters often believe they have covered their tracks so well that their activity is untraceable, but they are increasingly running into a significant obstacle when attempting to hide their crimes: Their digital footprint.

During the last decade, people have integrated digital tools into their personal and business lives at an astonishing rate. Since 2010, for instance, the portion of the global population actively using the web has increased from 27 percent to nearly 60 percent—and the number is climbing rapidly.

And for every text, email, card swipe, social media post, and web surfing session, those internet users are leaving digital breadcrumbs. In a financial fraud investigation, digital records can be crucial in proving fraudulent activity has occurred and can also help financial fraud investigators uncover the size and scope of a fraud and identify who is involved in a scheme.

A DIGITAL STANDARD

Clearly, analysis and interpretation of electronic evidence is now a standard part of a forensic investigation. During a forensic examination, modern fraud investigators understand that no physical evidential paper trail may exist and that fraudsters may be adept at covering up their activity in an organization’s electronic accounting system.

This means the investigator must cast a much broader net. As adept as an alleged fraudster may be at hiding a transaction in an accounting program, they may not know how—or even think—to permanently eliminate incriminating emails and documents from a hard drive or cloud storage system. A voice mail stored on a web-based telephone network or a recorded video call can give them away, as can the remnants of a text message chain.

In fact, a digital footprint is often far larger than a person may anticipate, and it is far more difficult  to cover up than a physical paper trail. Deleting or encrypting messages or documents are not safeguards, as they still provide evidence via the metadata they generate.

SOCIAL CLUES

In a  financial fraud investigation, it pays to look in every electronic corner—even those that, at first glance, may seem the least likely to produce viable evidence of financial misconduct.

This includes social media. A person’s Facebook, Instagram, Twitter and other feeds can actually become something of a goldmine for investigators. Through social media, fraud examiners have access to an abundance of metadata, including timestamps and geolocations. They can examine photos, and parse the content of postings for clues.

People are often so immersed in social media that they often share a wealth of information that can be immensely helpful in a forensic examination. They may, for example, discuss or display major purchases that do not align with their current compensation—and that can trigger a line of inquiry for investigators. They may post on a timeline their whereabouts at a particular moment that contradicts an alibi or that places them in the right location at the right time to commit a fraud.

In the end, the digital portion of a  financial fraud investigation can be critical in halting a fraud, provided one has the expertise to know where to look and how to extract information that may not be obvious to the naked eye. To learn more about how FSS helps organizations combat fraud via digital financial fraud investigations, contact us here.