Financial Fraud Prevention and Detection: Protecting Your Assets

Financial fraud is a major concern for banks and other institutions. It can cause huge financial loss, damage reputations and legal repercussions.

Banks need to be able to prevent fraud in real time and detect it when it happens. They must have an advanced analytics platform that combines data visualization and AI to spot suspicious behavior.

Online Banking Fraud

The digitisation of the banking sector has opened up new opportunities for criminals to cheat both banks and customers. It also presents a huge challenge for financial institutions to ensure security and protect their clients and employees.

To protect against online banking fraud, it is important to be vigilant and take some simple precautions. For example, you should never share your passwords or other personal information via emails or texts.

Banks don’t ask for these details by email or text, so if someone contacts you out of the blue asking for them, it is most likely a scam.

Fraudsters use phishing techniques to get you to give them your login and password details, as well as your account details. They often send spoofed emails that look like they are from your bank and include attachments.

Anti-fraud systems based on machine learning can make sense of large volumes of data and identify fraud before it happens. They can even detect unusual behaviour patterns and alert the bank and its staff to suspicious transactions in real time.

Wire Transfer Fraud

Wire transfers move money from one account to another quickly and easily, but they can also be a gateway for fraudsters. They often use a sense of urgency to lure victims, and they can leave your company with lost funds.

Fraudsters pose as executives or reputable vendors in order to get your employees to make wire transfers. They may use email to convey a sense of urgency, making it easier for staff to act without questioning.

Employees should be vigilant about identifying these scams and educate them about the best practices for preventing fraud. A good way to do this is by implementing a call-back verification process when setting up payment instructions for new vendors or making changes to existing vendor accounts.

A quick verification by calling the wire requester is one of the most effective ways to prevent fraud. It also allows your treasury management professional to verify the authenticity of a wire request before it’s processed.

Credit Card Fraud

Credit card fraud is a serious problem that can affect your financial health. The good news is that there are steps you can take to prevent it and detect it if it occurs.

A common type of fraud is known as skimming, in which fraudsters insert a device into a merchant’s terminal that captures information on the magnetic stripe on your card. This information can then be used to make purchases on your behalf.

The best way to protect yourself against credit card fraud is to be vigilant and check your statements on a regular basis. If you spot a charge you didn’t authorize, dispute it immediately.

Another way to detect fraudulent transactions is by signing up for real-time alerts from your credit card issuer. These alerts notify you any time a transaction exceeds a set dollar amount.

Empty Envelope Deposit Fraud

Empty envelope deposit fraud is a growing problem for banks and credit unions. It involves account holders or fraudsters who deposit empty envelopes with cash or checks in them, allowing them to withdraw the money without the bank or credit union knowing about it until the envelopes are opened.

While some banks and credit unions have successfully moved to imaged ATM deposits, a large percentage of the industry still relies on the envelope. That leaves a door open for fraudsters to counterfeit checks and image them at an ATM, says Wesley Wilhelm, senior analyst with Aite Group LLC.

To prevent and detect this type of fraud, banks and credit unions use sophisticated, cloud-based fraud detection solutions to catch suspicious activity before losses begin to build. These solutions include innovative agents that use artificial intelligence and machine learning to analyze billions of transactions in the cloud, maximizing alert quality and accuracy while filtering out lower-risk items.