Internal (or occupational) fraud is a recurring problem that hits businesses of all shapes and sizes worldwide. According to a 2014 study by the Association of Certified Fraud Examiners (ACFE), 5% of a given company’s funds are misused for fraudulent purposes each year, ringing in to the collective tune of $3.5 trillion annually.

It’s wise to know the different types of internal fraud before learning how to avoid it. Nine out of ten cases of fraud deal with asset misappropriation, wherein an employee steals cash before it’s recorded or lies about a business reimbursement claim. Next, financial statement fraud entails leaving out or purposely providing misleading information on financial reports; it accounts for almost 5% of fraud cases but with a median loss of $1 million. Finally, there’s corruption, which includes bribery, extortion, and other means of intentional wrongdoing in business transactions.

Although many cases of occupational fraud are intentional, it may also overlap with involuntary human error, leaving your business’s finances at risk by mistake rather than purposeful harm and self-interest.

In order to keep your business safe from internal fraud, adopt the following points into your company’s operations:

Know your employees well

It goes without saying that it’s in any company’s best interest to keep tabs on their employees. A happy employee will typically produce better work and have a stronger work ethic, striking a happy balance for employee and company alike. Always be aware of out-of-the-ordinary behaviors and mentalities, including but not limited to working overtime by choice, being unwilling to share duties and responsibilities with others, living beyond one’s means, having poor personal financial habits, and forming unprofessional, close bonds with vendors or customers.

Assign different people for different roles to carry out financial transactions

If one person handles money coming in from customers as well as funds going out to payroll, suppliers, and the like, your business is more susceptible to internal fraud given the power and authorization level of this particular employee. It’s safer to spread these duties amongst at least two distinct parties. For instance, the HR manager can tally up salaries, the accountant can authorize payroll distribution, while the CEO can oversee the entire process. It may also be in the company’s best interest to have one employee handle accounts payable and another handle accounts received. This “teamwork” model lends greater transparency and deters individuals from committing fraud on their own. However, this chain must be overseen to ensure that the parties don’t partner up to commit fraud together. The ACFE study found that while the median fraud committed by one person is $80,000, it jumps to $300,000 with two or more perpetrators.

Log and cross-check all financial transactions

Fraud can easily go undetected for sustained periods of time, in part due to inadequate cross-checking and a lack of oversight on a daily or weekly basis. As was discussed in the previous point, it’s worth the extra time for different employees to get involved throughout the various steps of setting up and implementing financial transactions. It’s not enough to rely on the standard monthly financial report; fraud can easily slip through the cracks if consistent and heightened oversight isn’t stressed.

Get a tailored anti-fraud solution by an expert

Authorize a fraud prevention specialist to conduct random audits to keep all employees on their toes and emphasize safe practices in the workplace. You can also hire his/her services to set up internal controls that your company can manage on its own. The study at hand found that most detected fraud cases were through internal tips rather than outsourced audits, so it’s advisable to incorporate anti-fraud procedures and initiatives into your corporate culture.

Rethink “easy” and “quick” bank transactions

Certain banks allow customers to make easy, instantaneous transactions at the single touch of a button. This minimization of the transaction process may allow an employee to gain easier access to your business’s bank account and thus provide an opportunity to misappropriate your company’s funds.