FBI identifies top terms used by fraudsters

At a time when regulators expect GPs to investigate any sign of corruption, Ernst & Young and the FBI have provided the top 10 most popular phrases used by fraudsters in emails.

GPs’ email monitoring systems may want to include “grey area” and “failed investment” as trigger words for further review. 

Software developed earlier this year by the US Federal Bureau of Investigation and audit firm Ernst & Young has revealed the most common words used in email conversations among employees engaged in corporate fraud. The software was developed using real life corporate fraud investigations, according to a joint statement. 

The top fraud words and phrases in email conversations:

1. Cover up
2. Write off
3. Illegal
4. Failed investment
5. Nobody will find out
6. Grey area
7. They owe it to me
8. Do not volunteer information
9. Not ethical
10. Off the books 

In May, delegates at PEI’s fourth annual Private Fund Compliance in New York heard that there may be no specific rule for SEC-registered GPs to monitor employees’ and partners’ email activity, but not doing so would likely result in a deficiency mark during an exam.

Regulators both in the US and abroad are also cracking down on corruption and expect GPs to do their part in rooting out signs of bribery or fraud. In the US the Foreign Corrupt Practices Act is being more heavily enforced by regulators, while the Bribery Act in the UK and the Corruption of Foreign Public Officials Act in Canada are also contributing to increased compliance risks for fund managers.  

“Most often such email traffic is only seized upon by regulators or fraud investigators when the damage has been done,” said Rashmi Joshi, director of Ernst & Young's fraud investigation and disputes services. “Firms are increasingly seeking to proactively search for specific trends and red flags.”