A FAST WAY TO IDENTIFY FRAUD RISKS AND VULNERABILITIES: PROACTIVE INTEGRITY REVIEWS (PIR)

On 4 June, the Basel Institute on Governance blog published a guest article which explains how risk-based Proactive Integrity Reviews have helped to uncover vulnerabilities and fraud risks in European Investment Bankfunded projects. The general principles are available for anyone to adapt and use. It says that early identification of fraud risks or vulnerabilities in projects is a major concern of investors and international financial institutions. It is said that the Fraud Investigations Division of the EIB uses Proactive Integrity Reviews or PIRs to identify potential vulnerabilities and major fraud risks in EIB-funded operations and projects. These reviews are different from classic investigations triggered by allegations of misconduct – they are launched proactively and based on a risk assessment or a request from another internal service. This makes them a very useful way to identify misdeeds before they are noticed – and even before they occur. The aim of a PIR is to –

  • detect red flags or indicators of fraud, corruption, collusion or coercion;
  • identify possible integrity risks; and/or
  • determine the project’s susceptibility to misuse of funds.

The approach is described as constructive, seeking to identify –

  • indicators that a project is vulnerable to or suffers from fraud or corruption (“red flags”);
  • the nature and extent of any problems or issues;
  • areas for possible follow-up, remediation/intervention and/or investigation; and
  • recommendations and/or mitigating measures to prevent recurrence or mismanagement.

The General Principles also give guidance on conducting a risk assessment and carrying out the review, from planning and fieldwork to follow-up.

https://www.baselgovernance.org/blog/fast-way-identify-fraud-risks-and-vulnerabilities-proactive-integrity-reviews

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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