CISI Combating Financial Crime chapter guide for fraud and market abuse, with section lessons, UK control cues, and review priorities.
Fraud and Market Abuse is a CISI Combating Financial Crime exam topic weighted at 4%. Use this chapter landing page to classify the crime or control problem first, then move into the section lessons for the specific UK authority, firm obligation, escalation, reporting, and evidence cues.
This chapter joins two related but distinct ideas. Fraud is about dishonest behaviour that creates gain, loss, or risk of loss. Market abuse is about behaviour that damages market integrity, such as insider dealing, improper disclosure, manipulation, or misleading signals. A strong answer does not collapse both into a vague “bad conduct” label. It identifies the conduct type, the harmed party or market, and the control route.
The Sarbanes-Oxley material is useful as a governance comparison. It points candidates toward internal controls, reporting integrity, certification, audit discipline, and senior accountability. The exam is unlikely to reward detailed U.S. legal citation for its own sake; it is more likely to test the reason those controls matter.
| Pattern in the facts | Better classification | Main control angle |
|---|---|---|
| false representation to obtain money or avoid loss | fraud | verification, investigation, evidence, reporting, remediation |
| employee diverts client assets or manipulates records | internal fraud | segregation of duties, access control, audit trail, escalation |
| account takeover, identity misuse, or payment redirection | external fraud | authentication, call-back controls, transaction monitoring |
| trading while holding inside information | insider dealing or market abuse | surveillance, restricted list, wall-crossing, escalation |
| orders designed to mislead the market | market manipulation | trade surveillance, supervision, market-abuse escalation |
| misleading public disclosure or reporting controls failure | reporting integrity issue | governance, controls, audit, senior accountability |
| Lesson | Main review cue |
|---|---|
| Fraud concepts and the UK Fraud Act 2006 | Describe the broad purpose of the UK Fraud Act 2006 in organizing fraud offences around dishonest behaviour and gain-or-loss outcomes |
| Types of fraud | Identify common internal and external fraud types relevant to financial-services firms, including identity fraud, payment fraud, mandate fraud, procurement fraud, and employee misconduct |
| Market abuse and insider dealing | Describe market abuse and explain why abusive conduct can damage market integrity and investor confidence |
| Sarbanes-Oxley Act 2002 | Understand the broad purpose of the Sarbanes-Oxley Act 2002 in strengthening governance, controls, and reporting integrity |
| If the case feels most like… | Better first move |
|---|---|
| dishonest customer, employee, or third-party statement | classify the fraud type and preserve evidence |
| suspicious trading around inside information | move to market-abuse and surveillance logic |
| false accounting or weak reporting controls | think governance, internal control, and reporting integrity |
| payment redirection or identity misuse | focus on authentication, transaction controls, and remediation |
| ignored alerts or access-control weakness | treat the issue as both event and control failure |
An employee learns that an issuer client is about to announce materially negative results and tells a friend to sell shares before the announcement. The employee says no client money was stolen, so the firm should treat the matter only as a staff conduct issue. What is the strongest classification?
Answer: A.
The facts point to improper use or disclosure of inside information and potential market abuse. The absence of direct theft does not remove the market-integrity concern.