Daniel Wong of WeirFoulds discusses pivot toward more insidious, technologically enabled acts
The digital transformation of workplaces has introduced profound challenges, particularly in employment-related fraud and misconduct.
For Daniel Wong, Chair of the Employment and Labour Practice Group at WeirFoulds LLP, the trends indicate a pivot toward more insidious and technologically enabled acts.
“Assets and things of value to a company are, in the digital world, becoming more intangible, non-physical,” he explained, citing examples such as cryptocurrency and intellectual property and that cash transactions are predominately electronic.
One alarming development, however, is the rise of employees coerced into fraudulent activities under duress, a phenomenon rarely seen a decade ago.
“We’ve seen employees who are what I describe as the reluctant pawn of a third party,” Wong noted. These individuals often face blackmail via compromising data or AI-generated deepfakes, adding a disturbing layer of complexity to fraud investigations.
Internal theft too has evolved, favoring incremental skimming over blatant one-time theft.
“It’s the little bits, and they get away with it over time,” added Wong, highlighting that such activities often fly under the radar until significant losses accumulate.
When internal misconduct is uncovered, organizations must act swiftly but methodically.
“A damage assessment to understand the extent and severity of the situation” is the first step, Wong emphasized, coupled with evidence preservation to support litigation and insurance claims. Balancing these objectives requires involving specialists early, from legal counsel to forensic experts.
“Preserving the evidence, particularly in the digital world, may be very important and may be very difficult to do so,” he said.
Privacy considerations add another layer of complexity. Different jurisdictions impose varying regulations on how employee information can be collected and used in investigations. Wong pointed out that while exceptions exist for investigation purposes, organizations should tread carefully to avoid overreach.
“Organizations should make sure that they don’t get too aggressive or excited with investigations and inadvertently create legal issues for themselves,” he warned.
Preventing misconduct begins with recognizing early warning signs, a task that requires a cultural and structural shift within organizations. Wong referred to the archetype of the “super employee”—those who never take vacations and resist delegating tasks.
While seemingly ideal, this behavior may mask efforts to conceal fraudulent activities. Similarly, employees whose lifestyles appear disproportionate to their incomes or who attempt to involve themselves in unrelated responsibilities could signal underlying issues.
Addressing these risks demands comprehensive policies and a culture that encourages transparency.
“We help [clients] understand their business risks and identify gaps,” Wong said of his firm’s approach. Training employees to spot red flags, coupled with appropriate policies and procedures, including clear reporting pathways, such as ethics hotlines, can help build resilience against misconduct.
At the heart of this cultural shift is fostering an environment where questions and concerns are welcomed without judgment.
“It’s creating an open-door policy where people feel comfortable in asking questions and seeking guidance,” Wong emphasized.
And, as organizations continue to navigate an era of rapid digital transformation, the stakes in employment-related fraud and misconduct are higher than ever. With tools like deepfakes and the proliferation of intangible assets, fraudsters are better equipped to exploit weaknesses.
Organizations must remain vigilant, proactive, and flexible, addressing vulnerabilities both technologically and culturally.
For Wong, it boils down to preparedness: “It’s about making sure that organizations have the right policies, the right people, and the right culture in place to address these risks effectively.”