Mikhail Ben Rabah, CFE
Audit Manager, Presidency of the Government, Tunisia
The news appears promising. Imed Boukhriss, the president of the National Anti-Corruption Commission (INLUCC) of Tunisia declared to the press that the INLUCC is about to launch digital fraud investigation tools to combat illicit enrichment.
According to the Tunisian Law, more than 10,000 government officials, elected representatives, board members and politicians are called upon to sign a statement acknowledging their assets, liabilities, income and interests. This is a self-declaration, meaning that individuals have no obligation to submit any documentation or proof. They have to sign a statement at each appointment, resignation or termination.
The INLUCC is tasked with following up and investigating any significant growth in these individuals’ net worth if it exceeds their admitted legitimate income. Since the INLUCC is an independent government agency with the authority to access a wide range of government records, the net worth method is a suitable approach to trace illicit transactions. As thoroughly described in the Fraud Examiners Manual, the net worth method “uses circumstantial proof to prove a subject’s sources of funds.” It goes on to say that the approach aims to “prove illicit income circumstantially by showing that a person’s assets or expenditures for a given period exceed that which can be accounted for from known or admitted legitimate sources of income.”
However, INLUCC may be unable to fulfill this mission due to the dearth of personnel and adequate tools. The enormous amount of data collected through individuals’ statements could make its processing and analysis a near-impossible challenge.
Digitization to the rescue
The INLUCC has finally admitted that without opting for digital solutions, processing the available data will be a near impossible task. Hence, they’ve launched an ambitious project: the development of an integrated application software which will automate some investigative processes. The main objectives of the solution are:
Checking the accuracy of data provided by declarants
The application is an integrated solution since it has access to several government databases such as:
The tax databases to check if income and property taxes payed by the subject are consistent with the data they provide in their statement
The landed property registry to reconcile information about real estate property belonging to the subject
The databases of the National Institute of Statistics to evaluate the acquisition value of lands and property
The Civil Registry through which the government records the vital events (births, marriages, and deaths) of citizens
The National Vehicle Register
Hence, the solution will automatically detect any major discrepancy (above a preset threshold) between the information provided in the subject’s statement and governmental records. The subject will therefore be invited by the INLUCC to explain the discrepancies and, if necessary, to rectify their statement. If it has been proved that the subject was intentionally omitting information or underestimating their assets or income ,or overestimating their liabilities, they will be sued under the Tunisian Law No. 2018-46 of August 1, 2018, on the declaration of assets and interests, the fight against illicit enrichment and conflict of interest in the public sector. Fraudsters may face fines equaling ten times the omitted or underestimated assets.
Tracing illicit enrichment and transactions
The second major benefit from the solution is to trace illicit enrichment by comparing data between subsequent statements (net worth method). The system will monitor and flag disproportionate growth in net worth compared to admitted legitimate sources of income. The solution encompasses a heat map based on a fraud risk score scale of one to five.
If the risk score is from one to three, the INLUCC summons the subject to justify the origin of their net worth growth. The outcome of any such proceedings is essentially to correct any information that is incorrect, incomplete or irrelevant.
However, if the risk score is four or five, the INLUCC launches a thorough investigative process.
Facilitating statement submissions
The solution also aims to deliver an easy-to-use application. Each individual will have a secure personal account so they can update their statement and personal data online. This will reduce the need for INLUCC offices to fill in and submit statements.
Decentralization vs. centralization
Certainly, the digital solution described above is an important step forward in the digitization of the INLUCC’s core processes.
However, one of the main limits of the approach adopted by the Tunisian Government is that the system is overly centralized. It does not allow government entities to monitor this type of risk by themselves. While governments all over the world are encouraging entities to set up their own fraud management programs, including preventing illicit enrichment and conflicts of interest, the Tunisian Government wants to manage these issues at a central level. Managing fraud risks should be the domain of each entity, and the government responsibility should be to assist entities in building effective and efficient fraud management programs.
Decentralization may help each entity to establish its own culture encouraging greater responsibility of organizations and individuals.
The views expressed in this article are the author’s own.
SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners