Embezzlement

Reviewed by Adithyan | Updated on Jan 05, 2022

Catalogue

What is embezzlement?

It refers to a white-collar crime in which an individual or entity plays fraud and misappropriation the assets entrusted to them. Though the assets are acquired lawfully, the use of the same is for unintended purposes labelling it as embezzlement. It is a clear breach of fiduciary duties. It is an intentional and methodical crime. An example of the same would be an individual creating bills and receipts for business activities that never materialized and claiming as if it were a legitimate, completed transaction.

How does embezzlement occur?

Embezzlement can be large scale or small scale. Even a store clerk taking away some money from the cash register is embezzling money and so is an executive of a large company who is attempting to falsify accounts. The embezzler can transfer assets beside money – he or she can misappropriate real estate, vehicles, electronic equipment etc. This act is punishable under both civil and criminal law.

Measures to prevent embezzlement

Vet the employee carefully before offering them a position in the company. One must avoid centralization of record keeping activities to enhance transparency and accountability. Bank statements must be doubly checked and adjust must be conducted on a regular basis. Have a dedicated in-house or third - party risk management team to create internal control and monitor behaviour and report suspicious activity. One must train employees in fraud prevention procedures and warning signs. Additionally, predefined security roles must be assigned to attach responsibility.

Related Terms

Recent Terms