What Is the Association of Certified Fraud Examiners (ACFE), and What a CFE Can—and Cannot—Legally Do
- Sam Spade
- Jul 30
- 4 min read
Updated: Oct 6
The Association of Certified Fraud Examiners (ACFE) is a globally recognized professional organization dedicated to advancing the field of fraud prevention, detection, and deterrence. Founded in 1988 and headquartered in Austin, Texas, the ACFE provides training, tools, and certification for professionals involved in the fight against fraud. Its most notable credential is the Certified Fraud Examiner (CFE) designation—a respected title, but one that is often misunderstood in terms of legal authority.
This article explores what the ACFE is, what a CFE designation represents, and importantly, what it does not allow a person to do, particularly in states like California, where private investigator licensing laws are strictly enforced.
The ACFE: A Professional Membership Organization, Not a Licensing Authority
The ACFE is not a government agency or legal regulatory body. It is a private, nonprofit organization—much like the American Bar Association (ABA) for lawyers or the American Institute of Certified Public Accountants (AICPA) for CPAs. It provides valuable resources: continuing education, publications, conferences, and a network for professionals focused on anti-fraud disciplines.
But crucially, the ACFE holds no statutory authority to issue licenses or enforce laws regarding the conduct of private investigations. It does not have the power to authorize a person to conduct investigations on behalf of third parties.
Think of it like this:
The ACFE is to fraud examiners what the National Association of Realtors (NAR) is to real estate professionals: a membership and educational body—not a licensing board.
Licensing for private investigators is a matter of state law, and in states like California, it is governed by the Bureau of Security and Investigative Services (BSIS) under the California Business and Professions Code §7520 et seq.
What Is a Certified Fraud Examiner (CFE)?
A Certified Fraud Examiner is a professional who has met the ACFE’s eligibility requirements, which include:
A combination of education and work experience in fields such as accounting, auditing, criminology, or law.
Successful completion of the CFE exam, which covers topics like financial transactions, law, fraud investigation techniques, and fraud prevention.
Agreement to abide by the ACFE’s Code of Professional Ethics.
CFEs are often employed by corporations, government agencies, law firms, and internal audit departments. Their skills are widely used in identifying fraudulent behavior, analyzing financial records, and building preventive controls against fraud within organizations.
What a CFE Cannot Do Without a Private Investigator License
Despite their fraud expertise, CFEs are not private investigators unless separately licensed by a state authority. This is a legal boundary that cannot be crossed by simply holding a CFE credential.
Key Restrictions:
A CFE cannot offer investigative services to the public, companies, or outside clients unless they are licensed as a private investigator in that jurisdiction.
A CFE can only conduct investigations on behalf of their employer. This means if they are a W-2 employee of a company, they can only investigate internal matters (e.g., embezzlement by an employee).
They cannot investigate third-party issues or client-related matters without proper licensure.
Example:
Suppose a CPA who is also a CFE is hired by a law firm to investigate financial fraud involving one of the law firm’s clients. If that CPA is not also a licensed private investigator in California, this would violate state PI laws, even if they are certified by the ACFE. The law is clear: only licensed PIs can be paid to investigate matters outside their own employer's internal operations.
Misconceptions About the CFE Credential
Because the CFE is well respected and has strict standards, it's often mistakenly interpreted as a license to investigate. But the ACFE has no enforcement power, and it does not—nor does it claim to—grant legal authority to perform third-party investigative work.
Similar Organizations for Comparison
To further understand the nature of the ACFE, consider these analogies:
Organization | Credential/Title | Legal Authority? |
Association of Certified Fraud Examiners (ACFE) | Certified Fraud Examiner (CFE) | No licensing authority |
American Institute of CPAs (AICPA) | CPA (Certified by state boards) | Yes, only via state boards |
National Association of Realtors | Realtor® | No, must be licensed separately |
Institute of Internal Auditors (IIA) | Certified Internal Auditor (CIA) | No licensing authority |
American Bar Association (ABA) | JD or attorney member | No—bar admission required by state |
Legal and Ethical Implications
Providing private investigative services without a license in jurisdictions like California is not only illegal, but it may expose the individual and their clients to civil liability and criminal penalties.
Moreover, misuse of the CFE title to imply authority to investigate others can be considered deceptive advertising, which may result in:
Disqualification from legal proceedings
Loss of credibility
Civil lawsuits for unauthorized investigation
Potential ACFE disciplinary action for misrepresentation
How to Work With a CFE the Right Way
If your company is investigating an internal fraud incident—such as employee theft—a CFE on staff can be an invaluable resource. They can examine accounting records, identify red flags, and establish internal controls to prevent future misconduct.
However, if you're seeking an independent investigation into a third party, especially for litigation or insurance fraud, you’ll need a licensed private investigator—ideally one who also holds a CFE designation.
Conclusion: Certification ≠ Licensing
The Certified Fraud Examiner (CFE) credential is a valuable professional designation that recognizes specialized knowledge in detecting and preventing fraud. However, it does not authorize its holders to conduct third-party investigations unless they also possess a valid private investigator license under applicable state law.
The Association of Certified Fraud Examiners is an important educational and membership organization, but it is not a government agency, licensing board, or regulatory body. Professionals and clients alike must respect the boundaries between professional certification and legal licensure.
For companies in need of licensed investigative services in California, it is essential to work with a legally authorized firm like Spade & Archer®.
Contact us at:
📞 (707) 908-8226 or (415) 715-1956
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