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Fraud in the Netherlands: the financial crime that needs a 21st century fraud response plan

International Compliance Association

financial crime , Financial Crime , Fraud , Netherlands

We don’t know who originally had the idea for committing financial crime, although what is said to be the first recorded incident of fraud – involving a Greek merchant called Hegestratos, an upfront payment for transporting a cargo of corn and a failed plan to scuttle the ship carrying it – dates back to around 300 BC.

Things have become a bit more sophisticated since then, not least because of new technology and the scope it offers for cyber-enabled fraud. Research published earlier this year by KPMG found that technology was a key enabler for almost a quarter of fraudsters and cyber-enabled fraud was ‘emerging as a growing threat’.

But whatever tools are used – from a multi-million dollar email scam to the old-fashioned technique of bouncing cheques – and whatever the fraudster’s motives for committing fraud may be, the threat to individuals and organisations is ever-present and the issue is rarely out of the headlines, in the Netherlands or around the world.

Bribery and corruption

A quick Internet trawl produces a string of recent high-profile fraud-related stories. In June, FIOD, the investigation service of the Netherlands’ Tax Administration, teamed up with the US Department of Justice in an operation that included FIOD searching ten locations suspected of being used in a  worldwide fraud that FIOD said ‘supposedly runs into many millions’. It was said to involve letters being sent to millions of recipients in countries including the US, the UK, France and Switzerland, tricking them into thinking they would win money if they sent €20 to €45 to a PO box in the Netherlands.

In the UK, the Serious Fraud Office (SFO) announced on 8 August that it had opened a criminal investigation into global civil aviation giant Airbus Group ‘into allegations of fraud, bribery and corruption…[that] relate to irregularities concerning third party consultants’. Airbus says it ‘continues to cooperate with the SFO’.

Globally, card not present fraud in Australia was reported to have shot up by 13% to AUS$226.3 million in 2015, Egypt is caught up in a wheat procurement scandal and the death has been announced of Lou Pearlman. Famous as the man behind boy bands Backstreet Boys and NSYNC, he was serving a 25-year jail sentence for a £300 million Ponzi fraud when he died.

The picture in the Netherlands

Let’s go back to the Netherlands, and take a closer look at the fraud landscape there, with a particular focus on cyber-enabled fraud and financial crime. The latest US Crime and Safety Report on the Netherlands, published in May this year, highlighted cybersecurity issues, including the attractions of the country’s sophisticated cyber infrastructure to the criminal world.

‘The Netherlands is home to the Amsterdam Internet Exchange (AMS-IX), the second busiest Internet exchange in the world, where the networks of Internet Service Providers (ISPs) from Europe, the Middle East, Africa, and Central Asia meet to exchange Internet traffic. International customers/ organizations utilize the reliable, high bandwidth services of web hosting providers in the Netherlands. As a result, malicious cyber actors use the critical cyber infrastructure in the Netherlands for criminal activities.’

As well as FIOD, which focuses on financial fraud and tax evasion, the Netherlands’ Fraud Help Desk works to make individuals and businesses more aware of fraud, to help protect themselves against this and other financially motivated crime.

The latest cases featured on its website highlight a range of threats from cyber-enabled fraud, including a warning about emails purporting to come from transport companies and designed to spread ransomware and an ‘online sales scam’  involving fraudsters who trick both buyers and sellers to secure the item being sold, for example on the sales site Marktplaats, or the money paid for it.

Elsewhere, a gang of ‘digital bankrobbers’ were jailed for up to three years in July after stealing around €270,000 from bank account holders by using malicious software.

Cyber-enabled fraud in the Netherlands

So those are some of the cyber-enabled fraud and financial crime stories hitting the headlines in the Netherlands. What do the crime figures have to say?

According to figures from Netherlands Statistics published earlier this year, one in nine people in the country were affected by a form of cyber-enabled crime in 2015.

These offences included identity theft, online shopping fraud and hacking, all of which are reported to the Fraud Help Desk on a daily basis.

Meanwhile, cybercrime and digital espionage were identified as the key threats to digital security in the Netherlands in the Cyber Security Assessment, published at the end of last year by the country’s National Cyber Security Centre. Other key findings included identifying ransomware as the preferred business model for cybercriminals and software vulnerabilities as the weak spot for digital securities.

Fraud and business

The Cyber Security Assessment also provided insights into cyberthreats to a range of business sectors, including financial services, where it pointed to a high number of incidents involving identity fraud, with offenders targeting both individuals and businesses.

It also warned: ‘Criminals are becoming more professional. What is striking is the quality of phishing e-mails…some attacks only seem to be carried out after months of ‘harvesting information’.

What about wider fraud in the business world? According to a 2015 EY fraud survey: ‘High-profile cases of financial misstatement and criminal investigations into accounting regularities do not appear to have resulted in any reduction in the risks of fraud…the risks of fraud, bribery and corruption are not going away’.

And it had a stark warning that in a highly competitive marketplace, ‘growth through corruption or fraud may seem the quickest option’.

However, there were some positive findings from the Netherlands in the report, which questioned employees in large companies in 38 countries in Europe, the Middle East, India and Africa: when it came to perceptions about whether bribery/corrupt practices happen widely in their country, only 13% of Dutch respondents thought that was the case, way below the 51% average for all countries.

When asked whether they had heard of fraud or bribery in their business over the last 12 months, just 9% of Dutch respondents said yes, compared with an all-country average of 21% and a high of 99% in Oman.

Combating fraud

If fraud has been around since 300BC, it’s a fair chance it will still be with us in 2300 or even 3300: it will just have evolved alongside the ways we live and work and the technology we use. But with some stark warnings about the cost of cyber-enabled fraud and other cybercrime alone – predicted to hit $2.1 trillion globally by 2019 – organisations cannot afford to leave fraud risks out of their strategic planning. Developing an anti-fraud culture, to protect against fraud happening in the first place, and fraud response plans, in the event that it does, are crucial.

We’ve recognised the importance of fraud risk management with the ICA Advanced Certificate in Managing Fraud, an intermediate level course aimed at current practitioners and those new to the field, which focuses on understanding fraud threats, preventing them from occurring and managing the response when they do. To find out more about this course, or our other qualifications focusing on financial crime prevention, risk and compliance and anti money laundering, why not register for one of our free information sessions, which we are holding in locations worldwide?


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