, PLEASE USE THIS DOCUMENT AS A GUIDE ONLY
1.1 Provide a comparison of a financial profile and a behavioural profile in the context of
financial crime investigation. In your discussion, include the key elements and purposes of each
profile type.
Comparison of Financial Profile and Behavioural Profile in Financial Crime Investigation
Introduction
In the context of financial crime investigation, profiling plays a crucial role in understanding subjects
and identifying potential wrongdoing. Two essential profiling tools are the financial profile and the
behavioural profile. While both serve to develop a comprehensive understanding of a subject, they
differ significantly in their focus, methodology, and purpose. This comparison explores the key
elements and purposes of each profile type.
Financial Profile
Definition and Purpose
A financial profile is essentially a financial statement about an individual (FOR3705, Study Guide,
Page 16; Association of Certified Fraud Examiners, 2021, Page 3.944). It shows what the subject
earns, owns, owes, and spends at any given point, or over a period of time (FOR3705, Study Guide,
Page 16).
The primary purpose of a financial profile is to identify inappropriate activity by revealing whether
the subject's expenditures exceeded known sources of income. This can yield direct evidence of
illegal income or hidden assets, or circumstantial evidence thereof (Association of Certified Fraud
Examiners, 2021, Page 3.944). It serves as a tool to establish the level of criminality, build evidence
for litigation, support requests for enforcement orders, and identify fund transfers between entities.
Key Elements
According to the FOR3705 Study Guide (Page 16) and the Association of Certified Fraud Examiners
(2021, Pages 3.944-3.946), a financial profile contains the following key elements:
Assets: These include cash on hand, checking accounts, savings accounts, certificates of
deposit (CDs), stocks, bonds, mutual funds, real property, vehicles, boats, aircraft, life
insurance policies, annuities, business interests, and substantial personal property. For each
significant asset, the investigator must determine when it was acquired, the cost, the method of
payment, the source of funds used to acquire it, and documentation available.
Liabilities: These include mortgages, loans, lines of credit, credit cards, installment purchases,
accounts payable, taxes, alimony, and child support. For each liability, the investigator must
determine the original amount, present balance due, when the liability was incurred, the
purpose of the loan or debt, how the proceeds were used, and the collateral given.
Sources of Income: These include salary, gifts, rental income, dividends, interest, sale of assets,
royalties, insurance proceeds, commissions, awards, inheritances, and disability payments. The
investigator must determine the total amount during a given period, the source, method of
payment, when funds were received, where they were deposited, how they were spent, and
available documentation.
, Expenditures: These include rent and mortgage, health costs, interest on loans, credit cards,
food, car payments, travel, clothing, utilities, and insurance. For each expenditure, the
investigator must determine the total amount spent, method of payment, where funds were
obtained to pay the expense, available documentation, and when the payment was made.
Methodology
To prepare a financial profile, fraud examiners follow five steps (FOR3705, Study Guide, Page 16;
Association of Certified Fraud Examiners, 2021, Pages 3.944-3.946):
Identify all significant assets held by the suspect
Identify all significant liabilities
Identify all income sources during the relevant period
Identify all significant expenses incurred during the relevant period
After identifying assets, liabilities, income, and expenses and assigning them values, analyze
the collected information using financial profile charts
The financial profile can be created using the subject's books and records (e.g., financial records, tax
records, accounting records, payroll records), but without access to such sources, fraud examiners
can rely on circumstantial proof.
Behavioural Profile
Definition and Purpose
A behavioural profile contains information about the suspect's personal characteristics, home and
furnishings, automobiles, and leisure activities (FOR3705, Study Guide, Page 17; Association of
Certified Fraud Examiners, 2021, Page 3.947). It comprises outside pieces of information that can
support estimates and fill information gaps in the financial profile.
The primary purpose of the behavioural profile is to reveal the subject's lifestyle habits that might
lead to identifying hidden wealth or assets (FOR3705, Study Guide, Page 17). While the financial
profile works best for large transactions, the behavioural profile is best at identifying smaller
activities and smaller currency transactions (Association of Certified Fraud Examiners, 2021, Page
3.947). It reveals what is important to the subject that would cause them to start accumulating illicit
income—such as where they travel, what type of expenditures they make, their associates,
significant others, pertinent habits, interests, and addictions.
Key Elements
According to the FOR3705 Study Guide (Page 17) and the Association of Certified Fraud Examiners
(2021, Page 3.948), the behavioural profile includes the following lifestyle indicators:
Personal Characteristics:
Carries large amounts of cash
Wears designer clothes
Has expensive jewellery
Maintains club memberships
Carries large amounts of cash
1.1 Provide a comparison of a financial profile and a behavioural profile in the context of
financial crime investigation. In your discussion, include the key elements and purposes of each
profile type.
Comparison of Financial Profile and Behavioural Profile in Financial Crime Investigation
Introduction
In the context of financial crime investigation, profiling plays a crucial role in understanding subjects
and identifying potential wrongdoing. Two essential profiling tools are the financial profile and the
behavioural profile. While both serve to develop a comprehensive understanding of a subject, they
differ significantly in their focus, methodology, and purpose. This comparison explores the key
elements and purposes of each profile type.
Financial Profile
Definition and Purpose
A financial profile is essentially a financial statement about an individual (FOR3705, Study Guide,
Page 16; Association of Certified Fraud Examiners, 2021, Page 3.944). It shows what the subject
earns, owns, owes, and spends at any given point, or over a period of time (FOR3705, Study Guide,
Page 16).
The primary purpose of a financial profile is to identify inappropriate activity by revealing whether
the subject's expenditures exceeded known sources of income. This can yield direct evidence of
illegal income or hidden assets, or circumstantial evidence thereof (Association of Certified Fraud
Examiners, 2021, Page 3.944). It serves as a tool to establish the level of criminality, build evidence
for litigation, support requests for enforcement orders, and identify fund transfers between entities.
Key Elements
According to the FOR3705 Study Guide (Page 16) and the Association of Certified Fraud Examiners
(2021, Pages 3.944-3.946), a financial profile contains the following key elements:
Assets: These include cash on hand, checking accounts, savings accounts, certificates of
deposit (CDs), stocks, bonds, mutual funds, real property, vehicles, boats, aircraft, life
insurance policies, annuities, business interests, and substantial personal property. For each
significant asset, the investigator must determine when it was acquired, the cost, the method of
payment, the source of funds used to acquire it, and documentation available.
Liabilities: These include mortgages, loans, lines of credit, credit cards, installment purchases,
accounts payable, taxes, alimony, and child support. For each liability, the investigator must
determine the original amount, present balance due, when the liability was incurred, the
purpose of the loan or debt, how the proceeds were used, and the collateral given.
Sources of Income: These include salary, gifts, rental income, dividends, interest, sale of assets,
royalties, insurance proceeds, commissions, awards, inheritances, and disability payments. The
investigator must determine the total amount during a given period, the source, method of
payment, when funds were received, where they were deposited, how they were spent, and
available documentation.
, Expenditures: These include rent and mortgage, health costs, interest on loans, credit cards,
food, car payments, travel, clothing, utilities, and insurance. For each expenditure, the
investigator must determine the total amount spent, method of payment, where funds were
obtained to pay the expense, available documentation, and when the payment was made.
Methodology
To prepare a financial profile, fraud examiners follow five steps (FOR3705, Study Guide, Page 16;
Association of Certified Fraud Examiners, 2021, Pages 3.944-3.946):
Identify all significant assets held by the suspect
Identify all significant liabilities
Identify all income sources during the relevant period
Identify all significant expenses incurred during the relevant period
After identifying assets, liabilities, income, and expenses and assigning them values, analyze
the collected information using financial profile charts
The financial profile can be created using the subject's books and records (e.g., financial records, tax
records, accounting records, payroll records), but without access to such sources, fraud examiners
can rely on circumstantial proof.
Behavioural Profile
Definition and Purpose
A behavioural profile contains information about the suspect's personal characteristics, home and
furnishings, automobiles, and leisure activities (FOR3705, Study Guide, Page 17; Association of
Certified Fraud Examiners, 2021, Page 3.947). It comprises outside pieces of information that can
support estimates and fill information gaps in the financial profile.
The primary purpose of the behavioural profile is to reveal the subject's lifestyle habits that might
lead to identifying hidden wealth or assets (FOR3705, Study Guide, Page 17). While the financial
profile works best for large transactions, the behavioural profile is best at identifying smaller
activities and smaller currency transactions (Association of Certified Fraud Examiners, 2021, Page
3.947). It reveals what is important to the subject that would cause them to start accumulating illicit
income—such as where they travel, what type of expenditures they make, their associates,
significant others, pertinent habits, interests, and addictions.
Key Elements
According to the FOR3705 Study Guide (Page 17) and the Association of Certified Fraud Examiners
(2021, Page 3.948), the behavioural profile includes the following lifestyle indicators:
Personal Characteristics:
Carries large amounts of cash
Wears designer clothes
Has expensive jewellery
Maintains club memberships
Carries large amounts of cash
