Many thanks to NPI Contoller Molly Lowder, CFE for this article.
For business managers, the buck stops at their desk when bank fraud issues are involved. Simply put, bank fraud involves using fraudulent means to obtain something of value from a financial institution. The four main types of bank fraud include; account takeover/identity theft, loan fraud, wire transfer fraud and check fraud. To have complete protection, your company should develop and execute a plan to prevent each of these types of fraud.
With the ever-mounting quantities of data in today’s volatile banking environment, paying attention to secure data storage and the tools used to access the data is more important than ever. Your Information Technology support provider should be aware of these risks and help you to defend against bank fraud. Business managers need to continuously think about the types of private data they share with banks, then build the foundation to protect it.
Key questions to ask about your bank fraud protections:
Do you want to take a proactive or reactive position?
Once a fraudster has an account number, whether you use online banking or not, they simply need to update/access your online information or create your online link. Once online they can access all identity information and take over the account, extend your line of credit, wire transfer funds—and suddenly you’re the one in hot water.
Is your authentication process strong enough?
One of the biggest culprits in bank fraud is not using strong enough authentication systems for private data. If you rely on a single sign-in process and a weak, easy to remember password you may be in trouble. Multi-factor authentication using two separate methods with complex passwords is the best way to ensure that a cyber thief isn’t stealing data right from under your nose. This can reduce fraud exponentially.
Are you using the obvious answers to authentication challenges?
For example, your mother’s maiden name? If so, it is time to tell a lie; tell the system that her maiden name was Sm*42it90h and the cybercriminal will never guess it.
Are you hesitant to call a person in authority to verify activity?
Verifying activity can save time and effort. It can help avoid compromise to your firm and client’s reputation. Fraudsters are hard workers and your banker knows it, so they are always available to take your call and research suspicious activity.
Bank fraud has implications way beyond just your organization and may even impact your clients, customers and employees. Is your organization prepared for these responsibilities? Structuring a proactive ongoing process requires discipline and vigilance but can pay big dividends when it avoids bank fraud. A strong IT support group and good security processes are the first line of defense to prevent bank fraud. If your business lacks good security structures or wants to augment the protections already in place, use a Technology Management company to monitor and manage the your systems.
What about transactional analytics, automated email alerts, and artificial intelligence? They play an important part too. I will continue to discuss these topics next time.
- ‘Executive Roadmap to Fraud Prevention and Internal Control’ Book by Martin T. Biegelman, CFE and Joel T. Bartow, CFE
- ‘Computer-Aided Fraud Prevention & Detection: A Step-by-Step Guide’ David Coderre
- ‘Bank Fraud: Using Technology to Combat Losses’ Book by Revathi Subramanian