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The Fraud Triangle revisited

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Abstract

This article revisits the Fraud Triangle, an explanatory framework for financial fraud, originally developed by the American criminologist Donald Cressey from his interviews with embezzlers. First of all, we describe several developmental cornerstones of the Fraud Triangle. Its recent theoretical and practical application is reconsidered. In accordance with the three elements – motivation, opportunity, rationalization – and on the basis of our empirical study of 13 company fraudsters in Austria and Switzerland, we illustrate some within-company measures, which may contribute to a low fraud risk corporate culture. Although opportunity is necessary but not a sufficient condition for ‘upperworld’ criminal offences, our respondents regard the perceived pressures they experienced as salient. Rather than rationalizations, there is a ‘fraud-inhibiting inner voice’ before the crime, which normally deters an individual from fraudulent behaviour. This inner voice becomes quieter over time until the fraud occurs; at least in their cases. Our interviewees argue that all Fraud Triangle elements – including the inner voice – are highly influenced by the corporate culture in their companies.

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Acknowledgements

The authors gratefully acknowledge the cooperation of 13 convicted Swiss and Austrian fraudsters, the support of judicial agency staff in Switzerland and Austria, forensic experts through several conversations as well as the ACFE Switzerland Chapter. As usual, all matters of fact and interpretation remain the responsibility of the Authors. This research was funded through a 1-year grant of the Swiss National Science Foundation (SNF), which did not influence the study design, collection, analysis or interpretation of data; nor the writing of the report or the decision to submit the article for publication. In any event, they are an apolitical scientific body.

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  1. School of Management, University of St. Gallen, Dufourstrasse 50, St. Gallen, 9000, Switzerland

    Alexander Schuchter

  2. School of Social Sciences, Cardiff University, Cardiff, CF10 3WT, UK

    Michael Levi

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  1. Alexander Schuchter
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Correspondence to Alexander Schuchter.

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Schuchter, A., Levi, M. The Fraud Triangle revisited. Secur J 29, 107–121 (2016). https://doi.org/10.1057/sj.2013.1

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