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Fraud and forgeries in banking and way to reduce

Fraud and forgeries in banking, Banks play a critical role in economic development of a nation. The increase in banking operations is now accompanied by an increase in frauds in the banking sector. While the operations of the bank have become increasingly important, banking frauds in banks have also increased .

FRAUD : Fraud is defined as “any behavior by which one person intends to gain a dishonest advantage over another”. In other words , fraud is an act or omission which is intended to cause wrongful gain to one person and wrongful loss to the other, either by way of concealment of facts or otherwise.

FORGERY : A person who makes any false documents with intent to cause damage or injury commits forgery. A document is a matter expressed or described upon any substance by means of letters, figures or marks, intended to be used, or which may be used, as evidence of that matter.

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Fraud and forgeries in banking Different types of fraud and forgeries in banking business

1. Skimming

Skimming is the illegal process of duplicating the information found on the magnetic strip of a credit card. This usually happens when a credit or debit card is lost or stolen as the fraudster can skim the data located in the magnetic strip or use the card online by using the card details.

2. Card not received

If the card is new, the PIN code should be sent in a separate letter, but this won’t stop a scammer from using the card for contactless or online purchases. Card not received fraud can be harder to detect because the targeted individual might not notice the card is missing at first.

3. In-person (stealing card and PIN)

Sometimes the scammer may engage the target in conversation to learn more identifying information about them. Like skimming, the card can be used in various ways, but with the addition of the PIN and any other information, the options are opened up to include shopping in face-to-face retail.

4. Phone bank fraud

Similarly to online banking fraud, this type of banking fraud attempts to convince the target to voluntarily give away information or transfer their money into another account.

CEO fraud, also known as Business Email Compromise (BEC) or whale phishing, is a type of financial fraud that occurs when a fraudster impersonates a senior manager or CEO to pressure an employee to make a payment.

6. Invoice fraud

This bank fraud example targets businesses by impersonating a supplier, usually via email, asking to update the bank details invoices are paid into. This might look entirely innocent if the fraudster has hacked the supplier’s info, as the request will appear to be authentic.

7. Online banking fraud

Online banking fraud can come in many guises, including phishing, malware attacks, catfish scams and clone websites. With so much banking done online, it’s not surprising that this is a common type of bank fraud.

Fraudsters are becoming highly skilled at creating convincing emails and websites, making it difficult for victims to protect themselves.

9. Counterfeit card fraud

This is a more common type of financial fraud in countries that have not yet fully adopted chip and PIN systems for bank cards. Like in skimming, the scammer will take the information from the magnetic strip, but with counterfeit card fraud, they will then transplant that onto another magnetic card to continue using it.

11. Loan fraud

Similarly to card identity theft, this type of financial fraud involves taking out a loan under someone else’s name using stolen or faked documents. This can be to utilise another person’s better credit or to avoid paying the loan back.

12. Cheque fraud

There are three main types of cheque fraud.

Counterfeit cheques – entirely fabricated but used to withdraw money from a legitimate account.

Altered cheques – legitimately written out but have their details changed without the account owner’s consent (such as changing the beneficiary or the amount).

Forged cheques – legitimate bank cheques which have been stolen from their owner and had a signature forged.

13. Non-delivery of goods

In an age of online shopping and small businesses, the non-delivery of goods becomes a very real issue.

14. Insurance fraud

This involves creating an insurance policy using stolen or faked documents or selling an insurance policy under false pretenses.

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