ACFE report shows decline in legal action against internal corporate fraud

A report by the Association of Certified Fraud Examiners (ACFE), based on 2,402 cases across 143 countries, reveals a decline in legal responses to internal corporate fraud. Only 25% of organizations harmed by internal fraud filed civil lawsuits against those responsible, despite such actions resulting in favorable outcomes for companies in 82% of cases.

Furthermore, the rate of reporting cases to police authorities fell to 54%, the lowest in ten editions of the study. Among companies that did not involve the police, 51% believed internal punishment was sufficient, while 35% cited fears of negative publicity. Other reasons for inaction included private settlements (20%) and litigation costs (19%).

Financial impacts are significant, with a median loss of $104,000 per case globally. In Latin America and the Caribbean, the percentage of companies failing to recover any funds rises to 68%. Junior Aurichio, Director-General of TSA Cargo, emphasized that criminal, civil, and ethical disciplinary paths are cumulative rather than alternative, noting that effective deterrence requires pursuing cases through the final legal instance.