What role does investigation play in a case involving economic or financial crime? Why is it so important?

An investigation takes place when there is a suspicion or allegation of wrongdoing within an organisation. This could be criminal, civil, commercial or administrative. As the situation may have legal, judicial, financial or potentially reputational consequences, it’s important to establish factually what has happened so that you can respond accordingly. Where appropriate, the investigation should provide a lawyer with everything they need to build a defence strategy based on reliable information and evidence gathered forensically (unaltered, preserved, indisputable).

An investigative approach requires a step-by-step process. Firstly, it’s important to identify all the information you need. Ensuring you preserve evidence that can be used to establish the facts is also key, much like securing a crime scene in a police drama series. Documents and information must not be lost or changed. So, it’s not enough just to gather the data. With the right tools and methods, the authenticity of the evidence can be guaranteed, ensuring that the information cannot be challenged later. Next, the data is analysed, to recreate the chain of events and the decision-making process and identify the people involved in the issue under investigation. This approach enables the company to explain what happened and why, and to establish who is responsible.

What are the consequences if these steps aren’t followed?

A full investigation means you can respond appropriately to every situation – however delicate – whether you’re dealing with suspected wrongdoing, a whistleblower, an accusation or enquiries from the regulator. In many situations, we’ve seen organisations reacting in haste, making statements without carefully checking the facts first, altering information and documents. This often results in complications later on, making matters worse. This could mean an employee being dismissed based on false allegations or a company claiming not to have committed any wrongdoing when, in fact, the accusations are found to be true.

It’s also important to start an investigation as soon as a suspicion has been raised, once the alert has been qualified. The longer you wait, the more likely it is that the evidence could be modified, difficult to find or even destroyed. This might be because data has been lost or deleted (whether deliberately or not), people have left the company or changes have been made to the computer systems, for example.

When an investigation forms part of a process conducted by regulators, you can respond more efficiently. Regulators are not particularly keen on having their time wasted. If you’re adequately prepared, you can respond quickly to questions, provide the required information and guarantee its authenticity.

What skills are required to carry out this type of investigation?

In terms of financial crime, the issues have become increasingly complex and require some specific skills.

These skills can be found in the role of a “forensic” accountant, whose approach is not the same as an auditor. They have to go beyond invoices, expense reports and transactions and be capable of questioning the links between different people, identifying their intentions and so on. Expertise in forensic IT is also critical to be able to retrieve data, collate it while preserving its integrity and analyse it in an appropriate way (essential in today’s world big data where volumes cannot be collected and analysed manually anymore). Finally, the base remains genuine investigative and analytical skills to seek out information, check, cross-check and question it in exactly the same way that investigative journalists do. These are skills that are increasingly hard to find.

The mistake that companies make all too often is to start investigating without the help of external experts. However, the skills and independence that these investigative experts bring to the table are an important factor when dealing with regulators or in the courtroom.

Listen to the podcast Arendt We Live #7 The challenges of Economic and Financial crimes: prevention, investigations, remediation .