Originally published in May, 2014.
According to Heidi Sealy, CFE, Senior VP of the Fraud Control Group at MGM Resorts International, recognizing that fraud exists in almost any business environment is a crucial first step to actively managing fraud within an organization. "Historically fraud has largely been dealt with on a reactive case by case basis. However, in large organizations it is vital to assess fraud risk across all business operations and proactively put controls in place to prevent fraud from occurring," Sealy said. "It is also important to create review processes to quickly detect fraud when it does happen, so it can be eliminated and prevented in the future."
Sealy sees fighting fraud in a large organization as a collaborative effort. MGM Resorts International grew through acquisition when MGM purchased Mirage Resorts in 2000 and then Mandalay Bay Group in 2005. With the development and opening of City Center in 2008, the company grew to 16 domestic casinos with 62,000 employees. "The workplace cultures and policies were very different at each of the individual companies that merged together under one management team," Sealy said. "A significant portion of our operations were siloed by property, making it difficult to support from a central location. MGM restructured in 2010, resulting in a more receptive environment for corporate support functions." This was also about the time that Sealy began to see the need for a way to identify and acknowledge the fraud that had been happening at each of the individual properties and address it for the company as a whole.
Internal collaboration with other key departments is imperative to MGM's Fraud Control success. There are daily interactions with internal audit, surveillance, security, legal, compliance and human resources. Strong communications between these departments is essential to MGM's successful fraud efforts, so a significant amount of time and resources are devoted to ensuring open, timely lines of communication containing accurate and relevant information. MGM has also established strong communication ties and daily interactions with outside entities such as gaming regulators and enforcement agencies.
"We recently reviewed our Fraud Control program at a high level and identified what we believe is a real opportunity for us to improve our efforts by establishing relationships and information sharing with other large corporations fighting fraud in their own environments," Sealy said. "We turned to the ACFE for advice and direction. Our decision to join the ACFE's Corporate Alliance came from the highest levels of our organization. Management wants to ensure that MGM takes a proactive, visible and vocal role in fighting fraud in the workplace, both within our organization and elsewhere. Joining a program like the Corporate Alliance to open a dialogue with other corporations experiencing similar frauds and sharing non-competitive information is a real win/win situation. We are eager to speak with other organizations on an extended basis about ways to prevent, detect and investigate fraud activities."
Sealy believes that one of the biggest benefits to joining the Corporate Alliance program, on top of savings on training and exclusive resources, is the networking that can happen between corporations publicly taking a stand against fraud. "The biggest bang for our buck is having an open dialogue with companies that face the same challenges we face. We all benefit when we come together in a variety of different manners." Along with joining the Corporate Alliance program, MGM recently launched hospitality industry roundtable conference call meetings to discuss the latest trends and frauds affecting the industry. "Very little of what we do on my team is competitive in nature," Sealy said. "The more we can communicate and share relevant information across companies, the more effective we will all be in our fraud fighting efforts."
While MGM Resorts International deals with a significant amount of gaming fraud on its casino floors, that kind of fraud represents just about 20 percent of her team's focus. MGM experiences fraud across all areas of operations, just like other large corporations. "We acknowledge what can happen on our casino floors, and the company has extensive and dedicated staff that observes and monitors for casino schemes on a continual basis. These efforts have been in place since the day our casinos opened." What did change with the Fraud Control Group's involvement was the expansion of communication across all properties to ensure that an issue detected at one property is investigated, described accurately and in detail, and shared with all other casinos so they can take appropriate action at their specific location.
Some of the fraud happening outside of the casino floors is at MGM's hotels, entertainment, and food and beverage outlets. With more than 250 restaurants, 300 retail outlets and 100 bars on the Las Vegas strip to monitor, the importance of an educated and organized team becomes a top priority. "We have over 2,000 cash registers on the Las Vegas strip. That offers a lot of opportunity for converting cash transactions to complimentary transactions in our casino environment," Sealy said. "Last year we replaced our analog surveillance systems with digital systems, allowing for much greater access to online, real-time camera views of cashiering activities. This expansive and flexible camera access has resulted in a significant increase in our cash handling review efforts. We use technology to assist in our fraud control efforts whenever possible to help manage the vast volumes of data and transactions we encounter."
Sealy and her team recently implemented a device at a high-end retail outlet that validates driver's licenses for all 50 states. Credit card theft is one of the fastest growing fraud schemes and continues to escalate at a rapid pace. One prevalent credit card scheme is for a fraudster to create a card using a real active account, but falsifying the accompanying ID. During the first month of installation, more than $100,000 in transactions from four different customers at one of MGM's jewelry stores was halted because the device detected their IDs as fraudulent. "Fraudsters can use technology to perpetrate a fraud, but we can use technology to assist in the prevention and detection of fraud as well." Sealy said.
After attending the CFE Exam Review Course in Las Vegas, Nevada, in early 2013 and earning her CFE, Sealy challenged her management team to earn for their CFE credentials, as well. She presented an abbreviated internal training class and encouraged their active engagement in the process. The entire management team in Sealy's department has tested for and received their Certified Fraud Examiner's (CFE) credential. "Earning the CFE was important to my management team because it confirms their competence in the area and lends credibility to our efforts when we are outside of the company, such as in public speaking engagements to external organizations," Sealy said. "All team members confirmed that though they were already actively working in the field of fraud detection and prevention, their studies related to the CFE Exam provided them with fresh insight into some of the issues that they had been dealing with in their daily work."
In closing, Sealy commented, "CFE certification for each of MGM's Fraud Control Group management staff, along with our active involvement in the ACFE Corporate Alliance program are foundational issues to our department mission and goals. We strive to continuously learn and improve our knowledge base, and see our association with the ACFE as a key factor to achieving our objectives."
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