If public funds in the form of subsidies or grants do not arrive where they are needed, the community suffers. Funding is provided, for example, to ensure that transformation projects succeed, to advance research or to accelerate new technological developments. All of this can be hindered if fraud is involved. Every fraudulently obtained subsidy euro is at the expense of companies, research projects or social initiatives that rely on funding. The funding providers, typically federal and state authorities, also lose out, because: Funding is only effective if it reaches the authorised recipient. It is therefore essential to recognise fraudulent actions in funding applications at an early stage, to systematically investigate them and to take preventative measures.
What are the typical fraud patterns?
Fraudsters use various methods to gain unlawful access to funding. Our practical experience shows that, in addition to exploiting weaknesses in the content of the projects, the following patterns can often be found as early as the application phase:
- Fake or stolen identities: Using false or stolen identities to apply for funding. This can be done by forging documents and manipulating data. In this context, publicly available information, such as scanned signatures of managing directors, is often used unlawfully.
- Fictitious companies and special-purpose start-ups: Applying for funding for companies, machines, research projects or services that do not actually exist. Companies are founded solely for the purpose of applying for funding without carrying out any real economic activity. A similar pattern can be recognised when companies change their registered office or activity in order to obtain eligibility to apply in order to simulate a specific location-related eligibility or a specific funding purpose.
- Concealing the corporate structure: By concealing information on beneficial owners, sanctions lists and similar prevention instruments are deliberately circumvented. Concealing links to other companies and persons can lead to internal turnover being unlawfully claimed for the receipt of subsidies.
- Multiple applications: Multiple authorisation can occur if applications are submitted that contain only slightly modified information. One possibility is to take advantage of funding programmes that overlap in terms of time and content.
- Data manipulation: Use of fictitious invoices, manipulated balance sheets, false delivery notes and falsified evidence to justify the use of subsidies and conceal the actual circumstances.
Fraudulent behaviour also causes considerable damage when it comes to the use of funds. Here too, bogus companies, special-purpose organisations and non-transparent corporate structures are used to simulate the earmarked use of funds.
Alexander Geschonneck
Partner, Forensic, Global Head of Forensic
乐鱼（Leyu）体育官网 AG Wirtschaftspr眉fungsgesellschaft
How do you recognise cases of fraud?
Effective fraud prevention in the context of application processing combines artificial intelligence (AI), automated systems and workflows with risk-oriented checks and forensic analyses:
- Some fraud patterns can be identified through AI-supported analyses and comparisons of application data, such as bank details, address or date of incorporation. It is important that all available sources are connected in compliance with data protection regulations and that findings from the ongoing process are regularly incorporated into the routines.
- Plausibility and outlier analyses are used for the financial application data in order to provide indications of fraudulent activity.
- A comparison with sanctions lists should also be carried out before each disbursement of individual funding instalments in order to ensure that funding always complies with the law.
- The results of the automated analysis should be evaluated by a team that is trained to recognise fraud patterns.
- Scalable background searches to screen corporate structures and identify beneficial owners and previous business activities.
- Support with KYC (Know Your Customer) processes to ensure legally compliant identity verification of applicants and beneficial owners.
- Conception and implementation of targeted training courses - gladly in tandem with you, in order to recognise suspicious cases at an early stage and implement preventive measures on a permanent basis.
- Assistance with the validation of documents. This includes checking the eligibility of applications, checking the use of funds and verifying the authenticity of submitted documents.
- Forensic analyses adapted to the initial situation and suspicions in a wide variety of forms. For example, financial flows can be reconstructed from transaction data, extensive document inventories can be structured and analysed using suitable keywords and financial and non-financial information can be checked for consistency.
Funding management promotes trust
Trust in the correct use of financial resources is the basis of our society. Funding fraud undermines this trust and deprives important projects or companies in need of the necessary resources. That is why every funding provider and administrator has a responsibility to ensure that the funds provided actually fulfil their intended purpose 鈥� and are used effectively.
Our support services
We support funding providers and administrative bodies in identifying fraud patterns, minimising risks and curbing misuse in funding projects.
Our 鈥楩raud & Grants Management Team鈥� is a key component of fraud prevention and detection. This team specialises in systematically reviewing grant applications and detecting cases of fraud, both in the application process and in the use of funds. By combining automated systems, manual checks and forensic analyses, fraud cases can be identified at an early stage. At the same time, targeted training helps to implement preventive workflows, strengthen internal audit mechanisms and effectively prevent fraud.
Customised solutions for funding providers, funding administrators, funding banks, public institutions and companies make it possible to prevent fraud and efficiently process suspicious cases. The aim is to minimise the misuse of subsidies, uncover fraud networks and strengthen trust in public subsidies in the long term. By deploying the 鈥楩raud & Grants Management Team鈥� at an early stage, funding organisations can ensure that public funds are used efficiently, for their intended purpose and in the interests of society.
After all, a functioning funding system is the basis for economic progress and social cohesion - and it is the responsibility of all those involved to protect this basis.
