This article takes its essence in the webinar we conducted with Jean Claude Marie, a specialist in the field of factoring and former commercial director of URICA..
In order to better understand the challenges of this article, it is important to redefine factoring.
Factoring is a financing and debt collection technique, allowing companies to obtain early financing and thus subcontract the management of their bill to a specialized credit organization.
In particular, this allows businesses not to have cash flow arrears or not to remain unpaid for too long, which could be blocking the progress of their activities.
URICA is a former factoring company. Based in London, URICA's mission was to pay invoices for various accounts based in France and England.
Created in 2014 in England, URICA moved to France in 2016 but will be forced to cease its activities in France in the summer of 2018 due to an excessive case of fraud. Although URICA was considered a Fintech, it was nonetheless solid on the market, in particular thanks to its partnership with Euler Hermès, recently Allianz Trade.
The fraud perpetrated against the factoring company was carried out by an agricultural entrepreneur through a company buying and selling inputs to farmers. Its activity is carried out through three companies, all specialized in agricultural work.
The fraud was carried out through false invoices.
First of all, the invoices sent to URICA were real, in order to reassure the factoring company. Some of the invoices were paid, however, others were not paid, resulting in a real loss of income for the factoring company. The fraud was well-conducted because in addition to the false invoices, the fraudster had established, with his accountant, double accounting in order to justify and disguise the supporting documents.
More than 300 false invoices were issued, including 172 for URICA. The fraud generated is over 9 million euros. Another actor other than URICA was involved in this fraud: Eurofactor, Crédit Agricole's factoring sector.
The fraud was therefore global and the invoices were several hundreds of thousands of euros. The damage caused by the fraud was all the more significant as it led to the bankruptcy of URICA. Indeed, the company was unable to recover from this fraud and thus had to close its French subsidiary.
”Everything started normally, the claims were paid. Little by little the outstanding amount increased and we realized that there was a problem because they were the ones who paid us the debts. When the bill was supposed to be 50,000 euros, he charged us 150 or 200,000 euros.”.
Jean-Claude MARIE, specialist in the field of factoring and former commercial director of URICA
The leader was sentenced to 2 years in prison and fined. The chartered accountant was banned from practising.
After studying the URICA case in depth, we will more quickly move on to two types of fraud: the Champagne Bricout fraud and the Smart Tréso fraud.
The Champagne Bricout fraud also involved the manager of the company concerned by the fraud. A system of false invoices had been created in order to avoid the loss of the estate and the castle. Employees were forced to issue false invoices by their employer. This procedure generated numerous complaints, thus forcing the prosecutor's office to open an investigation.
The Champagne Bricout fraud went beyond French borders given the link with a Luxembourg company but also with the Holding that bought it in the United States. Document fraud has led to numerous losses, also for the 90 employees of the Champagne Bricout company. We will dedicate an entire article to this complex fraud but with numerous repercussions.
Smart Treso fraud, on the other hand, is due to securitization financing.
Securitization is the act of transferring financial assets such as receivables to investors by transforming them through a company into financial securities. In the case of Smart Treso, it was a question of returning old public contracts into new contracts in order to obtain financing. False documents were thus created to justify.
The field of factoring has demonstrated its vulnerability to document fraud on numerous occasions. It is therefore essential for factoring companies to find a way to prevent this fraud.
There are lots of ways to protect yourself against these types of fraud. It is essential to use these various means in order to guarantee as little fraud as possible.
The first way is still today training and the transmission of good practices. Indeed, before being able to fight fraud, it is essential to know and understand it.
With regard to training, many players now offer training courses according to sectors of activity. In the field of insurance, we find in particular The ALFA, as the main training player or the DFCG in the banking/factoring sector.
The training is generally complemented by the transmission of good practices. Indeed, it is necessary to offer practical training, beyond the theoretical, in order to help the implementation in the field afterwards.
The second way is to conduct surveys. In this specific case, it is a question of deploying a service within the company, whose mission is to carry out surveys. This service can be supported by software in order to focus only on tasks with high added value for company employees.
KYC companies make it possible to know if a user is existing or not. Indeed, their mission is to find out if the customer exists on social networks, if he does have a bank account or if he exists in the yellow pages etc...
Finovox is a solution for detecting false documents. Our solution allows you to analyze all of your documents in less than 5 seconds and then to investigate them: 3D zoning, comparison of versions, analysis of the document's documentary structure, modification of fonts etc. The Finovox solution is your best asset for fight against document fraud within your company!
It is essential to combine several solutions in order to fight effectively against document fraud. Urica's case is no different. Indeed, although we have studied the latter in depth, it is far from being isolated. Fraud represents more than 42 billion losses per year, a significant amount that we must take into account in its entirety.
Would you like to watch the webinar with Jean-Claude Marie?
.jpg)
