SFIO to develop early warning system

The agency is expected to prepare a comprehensive framework for fraud prediction model by June this year

 

In an attempt to strengthen the government’s investigative arm for corporate fraud, the Serious Fraud Investigation Office (SFIO), and the ministry of corporate affairs (MCA) on Monday entered into various agreements. Among these are to set up an in-house forensic lab at SFIO and develop a framework for an early warning system help detect corporate frauds in the initial stages.

According to a senior official in MCA, the proposed framework will be based on inputs from RoboCop, the computerised tool used by the US market regulator, the Securities and Exchange Commission, that automatically triggers alerts concerning suspicious accounting at publicly-traded companies.

SFIO is expected to prepare a comprehensive framework for fraud prediction model by June, while the system is likely to be functional in the next financial year.

Besides, SFIO would set up an in-house forensic laboratory. For this, the agency on Monday signed an agreement with the National Institute of Electronics and Information Technology, under the ministry of information and technology, which will facilitate the setting up of the laboratory.

Forensic audit, a specialised field in accounting, is primarily used in cases of financial frauds to make a more accurate analysis of facts and figures.

SFIO and MCA also entered into separate agreements with the Financial Intelligence Unit (FIU) under the ministry of finance. The agreement will enable SFIO and MCA with access to the information on suspicious banking transactions under the Prevention of Money Laundering Act, 2002.

“FIU has been playing a pivotal role in the collection and dissemination of information on suspicious banking transactions under the Prevention of Money Laundering Act, 2002. FIU has been helping both the ministry and SFIO from time to time by supplying information on suspicious banking transactions,” the ministry said in a statement.

“Having access to banking information as well as expertise of FIU, the memorandum of understanding will help SFIO in conducting its investigation in a more effective manner. These initiatives will facilitate development of a comprehensive early warning system for detection of fraud and malfeasance at the earliest.”

The new Companies Bill, awaiting approval from the Rajya Sabha, would provide statutory powers to SFIO.

In the current financial year, 42 cases have been referred to SFIO, of which a probe has been completed in 15 cases.

The ministry is also working on plans to increase the sanctioned workforce at the investigative agency.