People as well as paper

A recent story in the media about an enquiry that was started following a tip-off by a whistleblower, is a reminder that interviews are as useful as the analysis of documents in a forensic accounting investigation. In this particular case, the Financial Conduct Authority (FCA) has started an investigation into currency transfer firm Revolut after being contacted in 2016 by an ex-employee who said they had concerns over compliance and the conduct of the firm’s chief executive, Nikolay Storonsky.

According to reports, the Lithuanian finance technology (fintech) company is accused of ‘losing’ a number of key financial executives, such as chief risk officers and money-laundering reporting officers, and of disabling money laundering protections.

Revolut has grown rapidly by offering its card holders fee-free foreign currency transactions, ATM withdrawals and bank transfers. A statement earlier this year said that the business was signing up 10,000 new customers a day and its four million users worldwide spend £3.9 billion a month via the Revolut card. This rapid growth allegedly created tension over compliance between staff and Mr Storonsky.

However, Mr Storonsky has refuted the allegations, writing in a blog earlier this year that “at no point” had the business failed to meet its legal or regulatory requirements. Furthermore, Revolut told the BBC that it was the first time it had heard of the complaint but the FCA refutes this. In a statement, the FCA said that while it was true that Revolut would have been unaware of the source of intelligence that gave rise to its enquiries, ‘it would be untrue’ to say that the business was unaware of any concerns or of the actions the FCA required them to take.

Financial irregularity can go under the radar for some time unless people with suspicions in the business speak up. Statements from employees can form the basis of a forensic investigation, which then uncovers hard facts to support the allegations.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Forensic investigations are a fantastic way to discover hidden financial irregularities within a business. Whilst documentation is a key part of discovering those irregularities, the statements of employees can also play a vital role.”

Author: Roger Isaacs 8 April 2019