Comprehensive Layered Embezzlement and Fraud Model in Financial Crime Prevention

Abstract This research develops the Comprehensive Layered Embezzlement and Fraud (CLEF) model as a preventative tool to examine the root cause of the offender’s psychology and mitigate financial crime before its execution. Building upon an integrative theoretical analysis of the fraud triangle, fraud diamond, fraud hexagon model and crime-as-choice theory, the CLEF model outlines the foundational layers necessary for characterising the personalities and psychology of embezzlers – specifically, dark triad traits – and institutional responses to embezzlement and fraud as a proof of concept. The CLEF model explains modern embezzlement through hypothetical scenarios – functioning as case studies – that illuminate the conditions conducive to such financial malfeasance. The model addresses cross-jurisdictional variations in embezzlement patterns and establishes the foundations of preventive measures – unlike traditional reactive frameworks. By emphasising prevention rather than detection, the model contributes to reducing the social and economic costs of financial crimes, providing the foundations for effective regulatory frameworks and organisational policies. Although the model offers an innovative psychological lens to understand the embezzler’s behaviour and mindset, empirical validation is essential to assess its applicability across diverse cultural and organisational contexts.