The Ministry of Defence's management of its losses from fraud and other economic crime

a) sets a department-wide objective to bring down the MoD?s overall level of estimated financial loss due to fraud and economic crime. This should involve setting out that the key aims of counter-fraud investigation are to maximise the return from prevention, disruption and recovery, to protect Defence capability, and to provide a deterrent against future threats. This objective should also make clear that business areas and functions (for example, commercial) across the MoD should work to reduce their respective levels of fraud and economic crime

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b) empowers a senior official, such as the Director General Finance, to bring together the different parts of the MoD to reduce its losses and to represent the department as the single victim of fraud and economic crime. The police should report to this official in alignment with the Victim Code on case progress where the MoD is potentially the victim of economic loss. This official should also seek to improve collaboration between the police and Fraud Defence and hold individual business areas to account for how well they manage their fraud risk and cases referred to them

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c) establishes an accountable multi-disciplinary team that brings together the Fraud Defence, service police and MDP staff that investigate fraud and economic crime. This ?fusion team? should pool resources for fighting fraud and economic crime and look to prioritise those resources to reduce the MoD?s economic and defence capability loss. The team should have a clear goal to maximise its return on investment and should bring the right skills, jurisdictions and powers to each case

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d) improves the triaging of cases. This process should include a more robust initial assessment of how the objective of minimising losses can be most efficiently achieved, whether through criminal investigation, HR action or another intervention. It should also include ongoing reassessment of how best to handle cases that the police have determined do not meet a criminal threshold

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e) continues to develop its understanding of its fraud and economic crime risks and uses this to improve its counter-fraud performance by: ? extending its understanding of its fraud controls and savings to include intelligence from across the MoD: For example, the MoD should gain a better understanding of the financial impact of fraud risks in its commercial activity and the extent to which commercial colleagues are, or could be, employing counter-fraud techniques to disrupt and prevent losses to fraud. It should also improve the information recorded in ?security incident? reports to include an assessment of the financial value of items reported as lost or stolen, and use this as part of its risk assessments; ? continuing to build its understanding of fraud risk: The MoD should require all business areas to have their own fraud risk assessment that identifies any significant potential financial loss to fraud. Where such losses are identified, they should be prioritised and regularly updated and monitored to ensure the risk is being suitably mitigated in line with the MoD?s risk appetite; and ? publishing a robust estimate of its total fraud losses, broken down by significant area: This estimate should be built from its understanding of fraud risks and be broken down to display the financial losses the MoD believes arise from different activities and, potentially, key supplier contracts. The MoD should set out its confidence level for different elements of the estimate, in a similar way to the NHS Counter Fraud Authority?s annual ?Strategic Intelligence Assessment?. Where the MoD believes there is a significant fraud risk in a significant area of its expenditure it should also report an estimate of its loss to fraud in its Annual Report and Accounts;

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f) gathers consistent, timely and complete information on fraud incidents either through a single case management system or aligning its case management systems. This should provide the MoD with a ?single version of the truth? on how it is handling its fraud incidents

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g) identifies where counter-fraud analytics would be most helpful for the MoD in tackling fraud and economic crime and resource these analytics in a way that maximises return on investment. The MoD should use case data to identify areas or activities where improved controls or data analytics could prevent fraud and economic crime before it occurs. The MoD should also review its data analytics projects from recent years to determine whether investigating fraud flags from this work could bring an improved return, and to identify where preventative controls should be introduced.

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