What is embezzlement? It is a form of misconduct that particularly affects organizations handling cash flows.
What does embezzlement involve?
Embezzlement involves taking money that has been entrusted to someone, even though it belongs to another person. For example, a bank employee might secretly take money that should remain in a customer's account. The money belongs to the customer, not the employee.
Embezzlement can be a white-collar offense involving professional fraud in settings related to businesses, health insurance, mortgages, marketing, or money laundering.
Many people buy insurance to protect themselves from serious financial losses. Examples include auto, homeowners', renters', and health insurance.
Warning signs of this misconduct
Insurance funds can also be targets of white-collar crime. One possible warning sign is:
- Regularly billing insurers for payments that include claims for work that was never performed.
White-collar crimes are sometimes mistakenly dismissed as victimless because they are not violent, but they do harm society and organizations in different ways.
Preventing embezzlement and related white-collar offenses is an important aim of compliance programs and reporting hotlines.
How to prevent these acts
To address this conduct, an organization can establish an ethics committee and a compliance program with effective policies, appoint a compliance officer with legal and accounting knowledge, and use a third-party reporting hotline. Together, these elements can form a prevention and response framework.
EthicsGlobal develops software that helps manage, investigate, and resolve cases of this kind. The ethics committee and compliance officer should also work in coordination.
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