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Thought Leaders Global Elite - Forensic Accountants 2021

Q&A

WWL Ranking: Global Elite Thought Leader

WWL says

Frances McLeod is “great with clients” according to sources, who applaud her depth of experience and knowledge of corruption, fraud and money laundering issues.

Questions & Answers

Frances McLeod is a co-founder and US head of Forensic Risk Alliance (FRA). Frances has 25+ years’ experience advising clients on sanctions, anti-corruption, fraud, internal controls, asset tracing and money laundering issues, and recently served as a DOJ-appointed independent compliance monitor to a European engineering company. She co-heads FRA’s data governance, technology solutions and forensics practice, and has extensive experience in complex international data transfer issues including in regulatory investigations and cross-border litigation. She speaks English, German, French and Mandarin, and holds an MA from Oxford University.

What motivated you to pursue a career as a forensic accountant? 

My interest in investigations began early in my career as an investment banker, when I was leading the Swiss bank German-language investigations into dormant Holocaust-era “Nazi Gold” assets. It was on that matter that I met Greg Mason, a co-founder of FRA, who was a database architect and programmer. With his expertise, and my investigation and language skills and financial sector background, we discussed the possibility of setting up a business ourselves and brought aboard our third co-founder – my brother – Toby Duthie, who was a project financier and brought significant financial modelling skills and an understanding of financing structures. All that is to say, my career unfolded largely because I followed my interests, and also because I teamed up with entrepreneurial partners whose talents, when combined, created an offering that is unique in the market.

What do you enjoy most about your role as a forensic accountant? 

I have a passion for developing economies and believe that corruption inhibits their success. That’s why I’m particularly focused on white-collar issues, particularly projects that involve anti-bribery and corruption. Forensics accountants have an important role to play in rooting out the underlying problems that lead to corruption, and it’s deeply fulfilling to help effectuate systemic change.

What impact has covid-19 had on your work and the forensic accounting market so far? 

The forensic accounting market has been resilient. Because governments stepped up to bolster their economies with enormous financial support, we were anticipating a commensurate uptick in fraud and corruption, as it is likely that some of these funds were inappropriately disbursed. It’s already starting to happen with the DOJ dealing with stimulus fraud, and similar issues with furlough fraud in the EU. The focus will likely soon shift to larger businesses that received government-funded bailouts. We expect to be called in to help build audit trails demonstrating appropriate application of funds or investigate fraudulent applications. The global economic recession may also expose issues that would otherwise have remained undetected, e.g. accounting malpractice and restatement work, M&A disputes, and other white-collar-related investigations and litigation.

To what extent is the increasingly virtual nature of investigations in a covid-19 landscape making for a more efficient process? In what aspects is it falling short? 

The transition has been seamless for FRA and created efficiencies, particularly by reducing the time spent traveling to client sites around the world. The nature of our work – often in countries where political and social tensions are high – required that we already have the internal infrastructure conduct investigations and handle sensitive data remotely. We were able to quickly service our matters remotely, but also recognise that there is no substitute for in-person interviews. Remote working also doesn’t lend itself well to dealing with highly sensitive or classified information, so in certain rare circumstances we do still need to be in the office or on client sites.

Practitioners have recorded an increased level of coordination between companies, regulators and authorities? How is this affecting your practice? 

We are indeed seeing a shift toward collaboration – particularly among regulators and authorities. We were recently in the unique position of being the only firm providing forensic accounting, data governance technology solutions and compliance support to Airbus and more than half a dozen law firms in its landmark €3.6bn global settlement with the French PNF, UK SFO, US DOJ and US DOS. Working across numerous jurisdictions in an investigation of this magnitude is complex and we faced extraordinary hurdles, including the production and examination of tens of millions of documents in multiple languages, and navigating GDPR as well as the French, German and Spanish blocking statutes and national security laws. It forced us to think creatively, and it has put us in an excellent position to successfully manage coordinated investigations going forward. 

How has your firm adapted to the challenges caused by covid-19?

Everything from new case start-up conferences to remote data collections and project management is now done remotely via secured collaborative work site portals. Our teams have dedicated online workspaces that offer multiple secured data transfer options. Our client meetings are conducted via secure video and chat with transport and end-to-end encryption. As an alternative to customary onsite collections, our technology solutions team addresses potential pressure points by guiding internal IT professionals through forensically sound identification and collection of data, and then encrypted files are transferred to FRA offices. This is all done remotely by our tech teams and trained partners who have the skills needed to address connectivity and security issues.

What advice would you give to experts hoping to one day set up their own firm? 

Putting the client first – even when it perhaps puts you back a step in wrapping up the project and collecting – will always pay off long term. Tailoring a customised approach to meet each clients’ unique needs, drawing on an understanding of their specific risks and challenges, will set you apart from larger competitors who just throw people at a problem. 

Why do you think data breaches are increasing at such a pace in the current climate? How is this impacting your work?

Data breaches are often crimes of opportunity and as companies have adapted to remote working, many vulnerabilities have been exposed. Breaches are often avoidable – it is critical for companies to invest in technology leaders that are fully integrated in the business and can holistically manage cybersecurity protocols, training and SOPs. Companies need to be aware that regulators are watching and will hold them to account if there is a breach. We help clients understand their risk profiles, develop proactive and comprehensive data governance strategies, and navigate the myriad data and regulatory challenges that result from cybercrime.

WWL says

Global Elite Thought Leader Frances McLeod is a “top-notch” figure whose “sharp mind” and personable approach make her a firm favourite.

Questions & Answers

Frances McLeod is a co-founder and US head of Forensic Risk Alliance (FRA). A former investment banker with more than 25 years of experience, Frances advises clients on sanctions, anti-corruption, fraud, internal controls, asset tracing, money laundering, and data governance issues. Frances has been deeply involved in FRA’s compliance monitorship work, including currently serving as an independent compliance monitor to a European engineering company pursuant to a DOJ settlement. She speaks English, German, French and Mandarin, and holds an MA from Oxford University.

What has been your most interesting case to date and why? 

I was recently appointed as the compliance monitor for environment-related sanctions on a German engineering company. It has been an incredibly academic and intellectually challenging project, and it has enabled me to work closely with many of the bright and focused FRA team members from across our global offices to create methodology for testing the company’s environmental regulatory compliance, in addition to anti-fraud compliance. 

How has the role of forensic accountant changed since you began you career? 

When we first founded FRA 20 years ago, the vast majority of our work was reactive in nature; clients were under investigation or aware of a looming regulatory sweep. Now, clients look to us as a strategic partner from the earliest stages. When there is suspicion of an internal problem that presents legal risk, clients are now reaching out to us proactively to assist with the internal investigation, help them understand the scope of the issue, and make recommendations for shoring up weaknesses. 

Sanctions compliance is one of the most challenging regulatory areas facing global corporations today. What impact has this had on your practice recently? 

As a global firm, we are most affected by conflicts between different sanctions regimes, as well as the constantly changing parameters in countries such as China and Iran. Since so many of our clients are multinational corporates, including in the global banking and financial services industries, they are subject to the different parameters across jurisdictions, and, therefore, need to be very focused on how transactions are structured to avoid inadvertent breaches. In the banking sector the only way to address this is by relying to an extent on interdiction software or screening that is riddled with false positives. So much time and resource is devoted to clearing these, but they can be flawed.

You are leading the firm’s GDPR compliance initiative. What are the main issues for clients in this area? 

Our clients face enormous challenges around data transfer and privacy rules, particularly in the context of navigating multi-jurisdictional investigations. Laws and regulations are evolving rapidly, and the approaches taken in each jurisdiction can at times appear to be at odds with one another, Meanwhile, corporates are doing their best to remain compliant, while balancing business objectives and stakeholder expectations. Especially given the large volume of disparate data corporates and their employees generate on a daily basis, this presents significant challenges when they are faced with an investigation. We saw the direction global regulation was headed early on and came out ahead of the curve, long before GDPR was even conceived. We have powerful data centres in France, the UK, the Nordics, Canada, the US and Switzerland, and also offer our proprietary mobile processing solution. This has allowed us to gather and process vast amounts of client data in-country, in adherence with global regulations and with the highest levels of data security available, and allowed our clients unparalleled control of their data. Our data governance, technology solutions and forensics team offers best-in-class consulting, end-to-end data transfer, processing and e-discovery solutions, and an in-house development and engineering team that can develop customised technology to meet clients’ needs. 

What do you enjoy most about your role as a forensic accountant and founding partner of FRA?

As a forensic accountant, I very much like anything with a white-collar angle. I believe that corruption inhibits economic development, and I have a passion for the developing world, which is why I tend to throw myself into anti-bribery and corruption opportunities. As a founding partner, it has been incredibly rewarding to see the one-firm collaborative culture, one of our most important tenets when we founded the firm, continue to be embraced. I am also very proud to have built a firm that is nearly 50 per cent women, with many strong women leaders coming up the ranks. 

What challenges do alternative banking systems and offshore havens present in your work? 

Strangely the challenges are much the same that they have always been. In the case of offshore havens, the opacity complicates the analysis of fund flows. A significant, and at times complicating, factor is how often enforcement activity can be triggered by investigative journalism, for example, the Panama Papers or the Baltic Russian money laundering exposés in the Nordics. In the case of alternative banking systems, the challenges in detecting money laundering have changed since the late 1990s to be more driven by counter-terrorism-related aspects. 

How would you describe the stance of the USA’s DOJ and SEC in investigations at the moment? 

They are still leading the charge on enforcement globally, but the trajectory for cooperation with outer agencies globally continues, making how investigations are conducted more nuanced. Even in the context of the covid-19 pandemic, I am reassured that the enforcement agencies are so proactive in identifying and bringing fraud-related cases. They are not going to back off, and are already looking for a viable workaround so they can continue to investigate wrongdoing, and engage with companies who are cooperating.

What advice would you give to someone looking to establish their own firm? 

Be client-focused! When we established FRA, my co-founding partners and I wanted to provide a highly customised approach that could meet our clients’ unique needs, which we didn’t feel the Big Four could provide. We leverage technology to develop market-leading solutions to clients in the context of investigations. This client-first mentality and commitment to excellence is at the core of who we are. 

Global Leader

WWL Ranking: Recommended

WWL says

Frances McLeod is “great with clients” according to sources, who applaud her depth of experience and knowledge of corruption, fraud and money laundering issues.

Biography

Frances McLeod is a founding partner of FRA, head of its US offices and recognised in GIR’s “women in investigations” listing as one of the top 100 remarkable women in the profession from around the world. She is a former investment banker and has more than 26 years’ experience advising diverse clients on sanctions, anti-corruption, fraud, internal control, asset tracing and money laundering issues.

Frances has been deeply involved in all of FRA's compliance monitorship work, including DOJ and SEC FCPA monitorships, a New York Department of Financial Services bank monitorship, the Ferguson City monitorship, a PCAOB monitorship and a DOJ fraud-related monitorship.

She led the team providing technical advice to the Asia Pacific Group on Money Laundering under a mandate from the Asian Development Bank and has provided expert advice in terrorism financing litigation cases. She served as an expert witness on counter terror financing in litigation involving an international bank and led FRA’s UN Oil-For-Food (OFF) investigation work.

Frances has extensive experience in addressing complex international data transfer issues, whether in regulatory investigations or cross border litigation. She led the FRA team responding to anticorruption investigation data requests in all jurisdictions for Alstom in the US, the UK, Brazil, Indonesia, Poland, Sweden, etc, which included addressing French data privacy and blocking statute issues. Frances was responsible for the design and implementation of claim evaluation and administration systems for the US$1.3 billion Swiss Bank and US$2.5 billion German Slave Labour Holocaust settlements.

Frances speaks English, German, French and Mandarin Chinese. She holds a master’s degree from Wadham College, Oxford.

WWL Ranking: Recommended

WWL says

"Frances is an excellent practitioner"
"She heads a top-notch team"
"She is sharp and a pleasure to work with"

Biography

Frances McLeod is a founding partner of FRA, head of its US offices and recognised in GIR’s “women in investigations” listing as one of the top 100 remarkable women in the profession from around the world. She is a former investment banker and has more than 27 years’ experience advising diverse clients on sanctions, anti-corruption, fraud, internal control, asset tracing and money laundering issues.

Frances has been deeply involved in all of FRA's compliance monitorship work, including DOJ and SEC FCPA monitorships, a New York Department of Financial Services bank monitorship, the Ferguson City monitorship, a PCAOB monitorship and a DOJ fraud-related monitorship.

She led the team providing technical advice to the Asia Pacific Group on Money Laundering under a mandate from the Asian Development Bank and has provided expert advice in terrorism financing litigation cases. She served as an expert witness on counter terror financing in litigation involving an international bank and led FRA’s UN Oil-For-Food (OFF) investigation work.

Frances has extensive experience in addressing complex international data transfer issues, whether in regulatory investigations or cross border litigation. She led the FRA team responding to anticorruption investigation data requests in all jurisdictions for Alstom in the US, the UK, Brazil, Indonesia, Poland, Sweden, etc, which included addressing French data privacy and blocking statute issues. Frances was responsible for the design and implementation of claim evaluation and administration systems for the US$1.3 billion Swiss Bank and US$2.5 billion German Slave Labour Holocaust settlements.

Frances speaks English, German, French and Mandarin Chinese. She holds a master’s degree from Wadham College, Oxford.

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