The 3 Most Common Types of Bank Fraud

Financial Guaranty Insurance Brokers Inc

As locations that handle money transactions, banks also face several types of frauds, scams and other deceitful activities. The leaders and operators of these financial institutions use insurance programs to decrease the damage done by these activities. They also work to identify the most common frauds before they occur.

Employee Fraud

Unfortunately, fraud occurs frequently inside the workplace. Employees with access to critical information can make illicit transfers, allow unreported transactions or use false information to deceive the organization. Bank owners use measures such as strict hiring practices and recordkeeping to detect or prevent these instances.

Wire Fraud

Wire transfer fraud involves malicious agents attempting to initiate unauthorized transactions through phone calls, emails or other electronic resources and under false premises. The most common wire fraud is phishing, where hackers send emails with malware that can infiltrate the bank’s system and start these transfers. Banks use improved cybersecurity measures and training to prevent these crimes. Source: Financial Guaranty Insurance Brokers, Inc.

Money Laundering

Criminals sometimes attempt to hide the status of illegally obtained currency by transferring it to other banks and legitimate businesses. The unwitting participation in these crimes can harm the reputation of financial institutions. These organizations attempt to prevent money laundering through security compliance and reports of suspicious transactions.

Banks and other financial organizations can be a likely target for theft, fraud and other criminal activities. Authority figures protect their institutions with increased security, education and insurance.