Tackling financial crime

Fraud, bribery and corruption

Low-level fraud, for example, online fraud, is a widespread problem for the public. Whilst the losses in each case may be small, they can be devastating for the individuals concerned and add up to hundreds of millions of dollars across the world.

The most important thing we can do is to alert customers to threats such as identity theft and educate them on how to protect their identity. To reach the maximum number of people, we provide online education tools and guidelines available on the web.

Falcon

Credit and debit card fraud is still one of the most common types of financial crime. To combat it, we launched the Fair Isaac Neural Network Fraud Detection System (Falcon), which helps us identify victims of credit card fraud earlier and more effectively. Falcon uses the most advanced technology to examine transactions, cardholder and merchant data to detect a wide range of suspicious bank card activity.

We already have Regional Detection Centres and use the Falcon system in nine countries. Early results for 2008 show significant progress, suggesting we are on track to meet our targets. For example, the ‘false positive’ alert ratio – the number of transactions that the system thinks are fraud compared to those that are actually illegitimate – fell significantly in 2008 after Falcon was introduced. In March 2008, the ratio was 241:1. In May 2008, when Falcon was introduced, the ratio was 135:1 and in July 2008 the rate had dropped to 47:1. Our target is 30:1.

Speaking Up

Speaking Up is our whistle-blowing programme that encourages employees to raise concerns about fraud or other abuses of our Code of Conduct. Employees may not always be comfortable about speaking up locally so we have introduced an anonymous channel to head office.

S.W.A.T.

SWAT game educates customers to protect themselves from financial crime

We launched an online game called S.W.A.T. to educate customers on fraud risk. The game illustrates risks and challenges players to minimise fraud. For example, they sift through various emails to detect fraudulent ones and rank the safety of a series of passwords.

The game is available on the home page of Standard Chartered’s website and has been used by players from across the globe.

Play SWAT here: SWAT

 

Bribery and corruption

Bribery and corruption exist throughout the world and banks may serve as the innocent channel for corrupt earnings. As several of our markets face significant challenges in this area, we need to ensure that we are not involved with any form of bribery or corruption wherever we operate.

For this reason, UK legislation requires banks to identify politically exposed people (PEPs) – those considered to have a higher risk of being involved in corruption – and to apply enhanced due diligence procedures to their accounts. In 2008, we launched an improved screening tool to help identify PEPs. This goes beyond the requirements of legislation because it defines PEPs as widely as possible. We are now using this tool across the Bank and we believe this puts Standard Chartered at the forefront of the industry in tackling corruption in our markets.

A more generic risk, which applies to any company, is that our staff may accept or pay bribes, but our main challenge is to avoid doing business with criminals laundering corrupt funds. Banks are a potential conduit for corruption, unwittingly transmitting illegally obtained funds, so our anti-corruption activity is closely linked to our anti-money laundering practices.

It is essential that staff are fully aware of how to combat bribery and corruption. In 2009, we will adopt a new Group policy on corruption and the issue has already been given more weight in our Code of Conduct, including a bribery and corruption scenario that all new staff must be trained on.

Highlights

  • Launched a refreshed Group Code of Conduct which includes anti-corruption training
  • 12,000staff able to screen new accounts
  • 640 per centincrease in internet fraud incidents investigated