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How to prevent yourself from getting defrauded

Updated: Nov 12



Did you know small and medium-sized businesses are more vulnerable to fraud than larger organizations, and the effects of fraud can be very devastating to you and your employees. The types of fraud that Small and Medium-sized Business should look out for are:


Financial Statement Fraud, Misuse of Assets, and Theft. Theft, employees might claim bogus expenses, taking your company's belongings such as laptops or your company's Intellectual property. Other primary frauds such as Financial Statement Fraud are also common for Small & Medium-sized businesses to prop up their Profit and Loss when Mergers & Acquisitions are ongoing. Finally, Misuse of Assets is when an employee that doesnt have a high clearance has access to documents that might compromise the company's data.


You might be wondering why Small & Medium-sized businesses are more vulnerable to fraud? Well, small and medium-sized businesses are more prone to fraud is due to many factors, which includes employees performing many functions across the organization, few formal oversight procedures, less expertise on financial matters, and the large impact on the cashflow that even a comparably small fraud event can have on the financial health of the company.


Here are steps you can implement in your business:


1. Allowing ONLY Key Personnel to access sensitive documents

  • Yes, It takes longer to get things done if you only allow certain individuals to have access, But the reason only key personnel should have access to sensitive data is to limit the number of people getting access. From there if any fraud event happens you're able to narrow it down to a few key people.

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2. Hire a 3rd party Accountant to review your accounts

  • Great, you have an in-house accountant. Things get done quickly and you're able to see your financial statements anytime you want. But have you ever thought that there your in-house accountants might be cooking your accounts and stealing from you? It’s always great to have a 3rd party to review your accounts. If you don't trust your in-house accountant but still want to view your accounts at any moment you should get a Cloud Accountant


3. KYC Checks

  • Know Your Customer Checks, is crucial to business owners. KYC Due Diligence allows business owners to do in-depth checks on their partner's business. This is to ensure that your potential business partner is not falsifying their financial statements and they are not in serious debt. This is extremely important when you're looking to partner up or looking to merge.


4. Put Everything in Writing

  • Put everything in Writing to safeguard yourself. Incase anything fraud-related happens you're able to safeguard yourself if your partner decides to do anything illegal OR tries to go against his word. If you don’t have what he promises you in writing and he goes back on his word, the situation becomes He said, she said.



5. Get a legal team to go through contracts

  • Great now you've completed your KYC Due Diligence and made sure your potential partner is not in serious debt or falsifying their financial statements. You also have everything in writing Now it's time to get someone who's an expert in legal work. Again this is to safeguard yourself, What if your potential partner adds a clause in your contract that actually harms you?



It is crucial that Small and Medium-Sized businesses take action to prevent fraud and detect it as soon as possible.


At ProKakis we strive to eliminate Money Laundering and Prevent the financing of Terrorism from society. We provide KYB Checks and Due Diligence checks to safeguard businesses globally. We have a proven track record of success and we aim to continue preventing financial fraud.


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