Nav: Home

Research evaluates how financial criminals evade laws

March 10, 2017

Despite preventative measures against bankruptcy fraud and money laundering, criminals are finding ways to exploit differing regulations in the United States and Europe.

In a recent study published online in the International Journal of Arts and Sciences, two UT Dallas alumnae examine the frequency and implications of bankruptcy fraud and money laundering. They also assess the degree of cultural and ethical differences between these acts in the United States and Europe, where the crimes are more prevalent.

Brenda Limon BS'16 and Pamela Wong BS'16 are the authors of the paper, which they wrote in their International Business class with Dr. Shawn Carraher during their undergraduate studies.

"The lack of uniformity between the financial systems and their regulations makes a lot of room for criminals to participate in these illegal activities. If somehow the nations of the world were able to create uniformity within their financial systems and the way regulations work, it would eliminate a lot of the crime that is happening right now," said Limon, a corporate finance graduate. She is working toward a master's degree in environmental geology.

The pair was among a group of students Carraher took to Harvard University last summer for the International Journal of Arts and Sciences' conference, where Limon and Wong presented their work to a panel.

Carraher, clinical professor of organizations, strategy and international management and undergraduate research director in the Naveen Jindal School of Management, said presenting research benefits students by differentiating them in the marketplace.

"In 2014, a group of international business students in the Jindal School of Management studied the present value of an annuity of presenting papers at Harvard, Oxford, and Cambridge, and the present value of an annuity of presenting a paper at Harvard is $280,000," he said.

Limon and Wong's study found that while auditors and financial analysts are in the process of reducing bankruptcy fraud and money laundering, completely nullifying these issues may never be possible without a uniform structure of financial regulations.

The researchers analyzed Hofstede's cultural model and how it pertains to financial regulations between the U.S. and Europe.

"It was interesting to see the cultural differences across different nations and how they manifest in the policies and financial regulations," said Wong, who graduated from the accounting program and is pursuing a master's degree in the Jindal School. "Specifically for the U.S., one of the dimensions is low power distance, which means Americans prefer an equal distribution of power amongst individuals. This is exactly why the U.S. has strong whistleblower protection against retaliation for people who speak out against corporations that commit these types of fraud."

According to the study, Americans also measure performance on a short-term basis, meaning they prefer quick results.

"We found this tendency to look for short-term results sometimes pushes people in influential positions to commit crimes, either money laundering, bankruptcy fraud or the manipulation of financial statements," Limon said. "Because they find themselves under pressure to show stockholders that the company is growing, or has closed a deal, that pressure instigates them to make the mistake of doing whatever it takes to get quick results.

"On the other side of the coin, the United States has been one of the most active in trying to create uniformity in the rules. They're one of the countries trying to come up with regulations that fit not only their standards, but standards of other countries that are strongly tied to them financially."
-end-


University of Texas at Dallas

Related Fraud Articles:

Medicare fraud and abuse linked to patient deaths and hospitalizations
Patients treated by health care professionals later excluded from the Medicare program for committing fraud and abuse were between 14 to 17 percent more likely to die than similar patients treated by non-excluded physicians, nurses, and other professionals, according to a new study from researchers at Johns Hopkins Bloomberg School of Public Health.
Patients of medicare providers committing fraud, abuse more likely to be poor, disabled
A new study from the Johns Hopkins Bloomberg School of Public Health analyzed providers excluded from Medicare for fraud and abuse, and found that the patients they treated prior to being banned were more likely to be minorities, disabled and dually-enrolled in Medicaid to supplement financial assistance for health care.
PSU study finds that money, revenge, morals motivate whistleblowers to expose tax fraud
A study by Portland State University School of Business accounting professor Cass Hausserman finds that people who expose others of tax fraud often do so as revenge that's disguised as their moral obligation.
UCLA researchers and partners work with sushi restaurants to reduce seafood fraud
A new monitoring project involving UCLA researchers and partners aims to take 'fake sushi' off Los Angeles diners' plates.
Researchers teach 'machines' to detect Medicare fraud
Like a 'needle in a haystack,' human auditors have the painstaking task of manually checking thousands of Medicare claims for specific patterns that could indicate foul play or fraudulent behaviors.
Reducing false positives in credit card fraud detection
Consumers' credit cards are declined surprisingly often in legitimate transactions.
Logging permit fraud threatens timber species in Brazilian Amazon
Timber harvested illegally under fraudulent permits is undercutting conservation efforts in the Brazilian Amazon, new research by an international collaboration shows.
Can FraudBuster help insurers use big data to combat fraud?
FraudBuster is a new data-driven approach designed to help insurers in high fraud rate markets, such as the automobile insurance market, proactively identify risk and reduce fraud.
Study says financial awards can actually discourage whistleblowers from reporting fraud
Financial awards can unintentionally discourage a whistleblower from reporting fraud in a timely manner by hijacking their moral motivation to do the right thing, according to a new study by researchers at Florida Atlantic University, Wilfrid Laurier University and Providence College.
Smart staffers: Why educated areas are good for business
The key to a thriving business may be the educational level of non-executive employees, according to new University of Georgia research.
More Fraud News and Fraud Current Events

Top Science Podcasts

We have hand picked the top science podcasts of 2019.
Now Playing: TED Radio Hour

In & Out Of Love
We think of love as a mysterious, unknowable force. Something that happens to us. But what if we could control it? This hour, TED speakers on whether we can decide to fall in — and out of — love. Guests include writer Mandy Len Catron, biological anthropologist Helen Fisher, musician Dessa, One Love CEO Katie Hood, and psychologist Guy Winch.
Now Playing: Science for the People

#543 Give a Nerd a Gift
Yup, you guessed it... it's Science for the People's annual holiday episode that helps you figure out what sciency books and gifts to get that special nerd on your list. Or maybe you're looking to build up your reading list for the holiday break and a geeky Christmas sweater to wear to an upcoming party. Returning are pop-science power-readers John Dupuis and Joanne Manaster to dish on the best science books they read this past year. And Rachelle Saunders and Bethany Brookshire squee in delight over some truly delightful science-themed non-book objects for those whose bookshelves are already full. Since...
Now Playing: Radiolab

An Announcement from Radiolab