Webcash is a company that supports the prevention of embezzlement incidents and the efficiency of the finance team’s work through its cash management solutions. Eunmi Cho, the head of Webcash Marketing Center, introduced the importance of cash management, which is increasingly emphasized in the digital transformation era, and the changing trends in solutions to respond to it at the ‘Future of Work Research Summit’ conference co-hosted by IT World and CIO Korea on the 28th.
The ramifications of embezzlement
Each department within the company prepares for potential crises on its own. The IT department monitors infrastructure outages, the security team monitors hacking attacks, and so on. Each department responds to risks in a way that suits its own characteristics. Embezzlement is a major threat to the finance team. When an incident occurs, the finance team frantically discusses the cause of the failure, the extent of the damage, and the recovery plan. Just as the IT department prevents and responds to incidents with technology, the finance team can also adopt more advanced solutions to deal with such crises.
Before looking at the technology, let’s first look at the current status and severity of embezzlement in Korea. In fact, when an embezzlement incident occurs, you may think that the problem is solved by punishing the person involved. However, the real key lies in the difficulty of recovering the damages. For example, there was an incident where an employee of the National Health Insurance Corporation embezzled 4.6 billion won of internal funds and fled overseas. Most of the embezzled money was squandered by investing in futures and cryptocurrencies. The employee was arrested and detained by the police in 2024, but the amount recovered by the police was only 720 million won.
In this way, embezzlers flee overseas to avoid investigations and transfer the embezzled funds overseas, making tracking difficult. Furthermore, there are concerns that the actual sentences for embezzlement crimes are relatively light, which may encourage crimes. A survey found thatAccording to the report, the average sentence for embezzlement of 5 billion won is only 3 years and 11 months.
Embezzlement incidents continue to occur regardless of the size of the company or industry. According to data from the National Statistical Portal, over 60,000 cases of embezzlement have occurred in Korea each year over the past four years. Even in public institutions and listed companies that must disclose their fund management information to the public, embezzlement crimes continue to occur.
Even in places where embezzlement has not yet occurred, industry insiders are internally concerned about it. EY Han Young asked 708 accounting, finance and audit professionals in domestic companies As a result of the survey38% of respondents answered ‘yes’ to the question, ‘Do you think there is a possibility of embezzlement or corruption at your previous or current workplace?’ This suggests that active efforts are needed at the corporate level to reduce embezzlement incidents.
Characteristics seen in embezzlement cases
Director Cho Eun-mi explained that there are several common characteristics of embezzlement crimes. First, there is forgery. This is a crime of embezzlement committed by repeatedly forging documents and exploiting accounts not managed by the company. For example, a civil servant A working at Gangdong-gu Office embezzled 11.5 billion won of public funds by transferring them to his personal account 236 times through internet banking over a three-month period. At this time, he intentionally omitted the team leader’s approval and forged nine official documents. A separate audit was conducted at the time, but no abnormalities were found in the flow of funds. This fact was discovered by a new civil servant who took office, and the embezzlement case was revealed to the world.
Another characteristic of embezzlement cases is the repetition of the crime. It is not that tens or hundreds of billions are embezzled at once, but rather repeatedly over several occasions. Center Director Cho Eun-mi explained, “Embezzlers usually start with small amounts and gradually increase the amount, attempting to embezzle multiple times.”
For example, at Company B, a listed manufacturing company, there was an incident where the finance team leader embezzled 5.5 billion won. At the time, the finance team leader changed the business partner’s account number to his own account number and received the company’s transaction amount into his personal account on dozens of occasions over several years. Center Director Cho Eun-mi stated, “The main reason why repeated embezzlement is not detected is because of continuous false reporting.”
Finally, when financial authority is concentrated in one person, there is a tendency for embezzlement to be repeated. An employee of C Startup was working in another department, but was promoted to the position of Chief Financial Officer after gaining the trust of the CEO. However, he committed embezzlement just three days after assuming the new position. The Chief Financial Officer was in an environment where he could easily commit crimes, as he exclusively managed OTPs and public certificates and had full authority over finances. The embezzler even showed meticulousness by intentionally sending his subordinates on vacation on days when he transferred company funds to his personal account.
Center Director Cho Eun-mi explained, “In the process of embezzlement, there is a characteristic of deceiving those around you through forgery and false reporting, and this is repeated several times,” and “If financial authority is concentrated in one person, the risk of embezzlement increases.”
‘Safety Device’ to Prevent Embezzlement Accidents
Center Director Eunmi Cho advised, “There is no perfect system, policy, or process to prevent embezzlement,” adding, “However, we must establish at least a minimum safety device.” The safety devices mentioned here are three in number.
All accounts of the first company should be within the scope of control. This means that all accounts of the company should be verifiable within the system at any time. The process of opening and closing accounts should be continuously monitored by the finance department as well as key management.
Second, payment authority should be separated. For example, the amount of payment that can be approved can be applied differently depending on the position or payment type. For example, a system can be created where the approval of the team leader is required for amounts under 1 million won, and the approval of the team leader and the head of the headquarters is required for amounts over 10 million won, or a policy can be operated where the approval of the HR team is required for salaries and the approval of the overseas team department head is required for overseas remittances. Center Director Eun-mi Cho emphasized, “We recommend dividing the payment process according to the characteristics and environment of each company and transferring funds through a multi-step approval system,” and “The stages where money goes out should be designed closely.”
Third, a monitoring system must be established so that the CEO and CFO can check the status of funds in real time. Organizations that use a manual reporting system need to improve their financial management methods. Center Director Eun-mi Cho explained, “It is similar to how model CCTVs can prevent crimes to some extent.” She added, “Even if the CEO or CFO does not monitor in real time every day, simply having a monitoring system can have the effect of drastically reducing the number of embezzlement crimes.”
This philosophy is reflected in Webcash’s cash management solution. Webcash’s solution allows you to check all of your company’s accounts on a single screen, and collects financial information from banks, securities, insurance, card companies, and the National Tax Service in real time. It also sends out notifications immediately when abnormal transactions are detected. Customers can set up situations in advance where they suspect embezzlement, such as large-sum fund transfers, late-night fund fluctuations, and deposits into accounts with no transaction history, and notifications are provided immediately when such situations occur.
Webcash launched a service called ‘Global Dashboard’ last year that can manage global funds in an integrated manner. Global Dashboard connects to 190 overseas banks in 39 countries, automatically generating reports on the status of overseas business funds as well as current market conditions by country. Center Director Eunmi Cho explained, “We launched ‘Global Dashboard’ at the request of many clients, and it will be especially helpful for companies preparing to enter the global market.”
Webcash also provides CEO and CFO customized digital report services including the status of savings, loans, and investment assets regardless of the size of the company. In addition, it has developed an ‘AI Financial Secretary’ service that omits the complex process of understanding the status of funds and provides answers through AI with only voice questions. This function is scheduled to be officially launched in October of this year.
Currently, Webcash’s cash management solution is being used by approximately 7,800 companies in the manufacturing, information and communication, and distribution sectors, 100 public corporations, and 180 local governments. Center Director Eunmi Cho explained, “Our client, Group B, has unified the cash management systems of its 30 affiliates into a Webcash solution, and through this, has established an integrated monitoring system for all affiliates.”
jihyun.lee@foundryco.com
Source: www.itworld.co.kr
