SFIO developing early warning system to detect corp frauds

The government's white-collar crime investigation agency SFIO is developing a new system for early detection of corporate frauds and to safeguard gullible investors from fly-by-night operators.

The new system would also trawl social media platforms for leads on any possible fraud-in-making.

The Serious Fraud Investigation Office (SFIO), which comes under the Corporate Affairs Ministry, floated a tender earlier this month for the selection of a 'managed service provider' to develop this 'Early Warning System' (EWS), calling for bids to be submitted by May 31.

A revised notice has been issued now, extending the last date for bid submission to July 10.

The idea of developing an EWS was first floated in 2009 after the Satyam fraud came into light.

The new system would leverage MCA 21 database as primary data along with data available from other regulatory organisations and external sources including social media, that help in detecting potential frauds.

It would generate the data that helps in raising red flags and alerts using business intelligence and analytics capabilities. It would help in protecting investors from getting exploited by the deceitful companies or persons.

Besides, it would help in identifying companies for further examination, scrutiny or detailed investigation by Registrar of Companies (ROCs), other offices of Ministry of Corporate Affairs, or by the SFIO.

The system would safeguard against disruptions caused by corporate fraud events, by proactively monitoring the operations of the companies, through the statutory reporting mechanisms and other data available in the public domain.

Earlier in December, Minister of State for Corporate Affairs Arjun Ram Meghwal had said the SFIO is in the process of developing an EWS and a consulting agency has been engaged to prepare the conceptual framework.