Fraud schemes can be detrimental to all companies but can be particularly damaging to banks and finance companies, as most times other people’s money is involved. Preventing fraud requires using relevant data to help develop programs that protect against fraud attacks. That’s why the Association of Certified Fraud Examiners (ACFE) created the Report to the Nations, which is a global study of occupational fraud and abuse. This report captures data on real fraud cases and explores the true cost, tactics, victims, and perpetrators of fraud schemes. They recently released the 2020 report which included a sub-category specifically for banking and financial service-related fraud cases. Here are some key takeaways from the sub report, providing you a deeper view of how fraud perpetrators target banks and financial companies:
- 386 banking and financial related cases were reported in 2020, or 19% of all cases. The median duration of fraud scheme 8 months, and the median age of fraudster was 35 years old.
- Tips remain the most common fraud detection method at 46%. Internal audit is second at 15%.
- Detection by tip was substantially higher at organizations with hotlines, and employee training increased the likelihood of detection by tip.
- 87% of all fraudsters displayed at least one behavioral red flag – top 3 are:
- Living beyond means
- Financial difficulties
- Unusually close association with vendors/customers
The data in the report provides many significant insights that companies can learn from. If one thing is clear, it’s that the right training materials and establishing an environment that encourages employees to report strange activities are essential to minimizing fraud attempts. If you want additional information about combatting fraud, our expert forensic team at BerganKDV can help. Contact us to learn more about fraud prevention tactics.
To view the full Report to the Nations, click here.
