Banking Fraud And The Banking Industry

Internal fraud consists in “a type of fraud that is committed by an individual against an organization. [Furthermore], a perpetrator of fraud engages in activities that are designed to defraud, misappropriate property, or circumvent the regulations, law, or policies of a company”[8]. Not only has the incidence of internal fraud increased in frequency because of the availability of sensitive information such as client details or confidential business documents; moreover, this type of fraud is found in various types of organizations, ranging from corporations, public service institutions and financial institutions. Our analysis will concentrate on the most common and prolific types of internal fraud, namely identity theft, insider trading, loan fraud and wire fraud. Interestingly, PriceWaterhouseCooper conducted a survey that revealed that the “demographics of a typical fraudster are as follows: males (85% of cases), 31-50 years (72% of cases), reached high-school level (50%), Bachelor’s or post graduate degree (50%) and middle or senior management (52%)”[9].

What happens when a bank accepts a check with a forged endorsement? Who suffers the loss? Who is liable? Where can these answers be found? Check fraud law is governed by Articles 3 and 4 of the Uniform Commercial Code (UCC). The National Conference of Commissioners on Uniform State Laws and the American Law Institute created the Uniform Commercial Code in a joint effort. It took over ten years to originally draft the UCC, and a further fourteen years for the UCC to be implemented across the country. The creation of the UCC began in 1940 in an effort to "attack major commercial problems with comprehensive legal solutions" The UCC allows commercial organizations to do business across jurisdictional boundaries with confidence because these

It is important to first gain an understanding of the various types of fraud, in order to aid understanding in regards to the prevention of fraudulent activity. This paper begins with a review of the definition of financial fraud, and identification of the different fraud types. Further, included is an examination of what motivates individuals to commit fraud, including an identification of some of the method in which people commit fraud. A discussion of the importance of the fraud triangle, and how rationalization contributes to fraud is a key area of focus. Finally, there is an examination of some controls that prevent and detect fraudulent behavior, including the value and importance of understanding the nature of fraud for

According to the more than 5300 Wells Fargo’s former bank staff, direct cause of fraud is the bank directly linked employee compensation and sales performance. To face the difficulty of matching the sales aim, they had no other choices but to take a risk, and ultimately will inevitably damage to the interests of customers as the

Over the few decades, Wells Fargo had built up a reputation detaching itself from the likes of Wall Street by putting their customers first before money. However, one cannot help but think that Wells Fargo put money before customers as their aggressive sales goals led to the opening of unauthorized accounts without customer knowledge. During this fiasco, which dates back to 2011, Wells Fargo employees had opened as many as 2 million of false accounts in real customer’s names without the proper consent. An integral part of the problem were senior executives and management staff involved. Either they overlooked this growing scandal by turning a blind eye, or partook in it themselves, but both ways there is responsibility to be claimed, and guilt to be measured here.

Fraud is an issue that causes major scandals, although it is a very ancient scheme. Recent fraud events gave light to gaps that facilitated its events. Its extent was drastic by affecting financial markets that eventually trickled into global markets. Major organizations and countries worked cohesively and continue to address the gaps and, in effect, implemented strict compliance regulations to diminish and refrain fraudulent activities. Strict compliance regulations are examples of a fraud response plan the small family business could have implemented to refrain the perpetrators from fraudulent incidents, protect organizational assets and the organization’s going concern.

Recently, Wells Fargo employees, trying to meet onerous sales goals, created as many as 2 million unauthorized savings, checking and credit card accounts creating a huge scandal for the San Francisco-based institution. It has prompted calls for a wide-ranging investigation into the banking industry, where sales goals are common and complaints of unauthorized accounts have been lodged against other banks. I hereby have examined this issue thoroughly and would like to provide an analysis and two solutions that can prevent these types of scandals from occurring again; one is the modification of daily sales target system and the other is the institution of technology to verify customer contacts.

Financial fraud has been present since before the Industrial Revolution, many cases making a long lasting impact throughout history (Pearson, T. A., & Singleton, T. W. 2008). The 2008 financial crisis was carried out with a significant amount of pressure throughout many industries, results including fraudulent activities. Back of America was brought to the forefront of the financial crisis when mortgaged backed securities collapsed. The US Government sued Bank of America in connection to defrauding investors, following an ongoing investigation into their direct actions during this time period. During the ongoing investigation, stemming from the financial crisis, Bank of America continually tried to prove their innocents and their lack of

Nowadays, we have modernized banks many in trust their money in. The banks lends money to customers at a higher rate than they pay to depositors or than they borrow it. The difference, known as the margin is kept by the bank. For example, if a bank pays 1% interest on deposits they may charge 6% interest on loans grossing 5% for themselves. Moreover, bank employees from Wells Fargo secretly opened unauthorized accounts to hit sales targets and receive bonuses. Not only is this identity theft, however, it shines even more light on how the love of money is the root of all evil. Lastly, banks

In today’s society, white collar crime is now becoming more widely known because of the advancement of technological devices and brilliant minds. In fact, over 730,000 counts of suspected financial wrongoing were recorded in America last year, according to recent data from the Treasury Department 's Financial Crimes Enforcement Network (The Economist, 2009). White Collar Crime is a term reportedly coined in 1939—is now synonymous with the full range of frauds committed by business and government professionals including one of the many called “Check Kiting” (FBI, 2010). White collar crime is described by the federal bureau investigation (FBI) in three words: Lying, cheating, and stealing which is exactly the kind of people that Scott in this case analysis has to deal with. In this case, the Operations Manager, Scott at a small bank has the duties of overseeing transactions and defining clients who use bad checks. While going through the daily routine, he finds that his wife’s friend, who is the chief financial officer of the bank, appears to be involved in check kiting. According to the business dictionary, check Kiting is a form of check fraud, in which checks are issued against funds that a bank has credited into an account for deposited, uncleared checks. With careful timing of deposits and withdrawals, this scam can be turned into a large sum. Furthermore, In addition to knowing the suspect, Scott also is aware the CFO is also involved in an unsteady

According to Daniel F. Dooley (2008), a member of the Commercial Fraud Taskforce, financial fraud with private middle-market companies is on the rise. In fact, Mr. Dooley believes that he has seen more instances of fraud in the past two years than in the previous ten. He notes seven areas in which financial fraud has increased over the past few years:

In February of 2009, the Antigua/Texas based global financial group (made up several subsidiaries owned by the same owner) owned by R. Allen Stanford was charged with scamming their customers by the Securities and Exchange Commission. Stanford Financial Group was charged with fraud when deceptively selling consumers $8 billion dollars in deposit certificates. According to The Money Alert, ”A certificate of deposit, or CD, is a type of low-risk investment that many people use when they want a small return on their investment without having

These hackers threaten our security and confidentiality every day by getting unauthorized access and stealing our most valuable or sensitive information. Privacy and security concerns are not unique to the bank industry; they are spread to personal information such as health or employment, and other e-commerce transactions. The protection of this information has to be ensured by the company or bank in order for customers to continue the relationship with such.

White collar crime is a defined as a crime committed by an individual of high spcial ranking, that receives alot of repsect in the comunity, the term coined by socialogist Sutherland. Over the years this descriptio of white collar crime has been contested and now covers a range of crimes. One in particular is counterfeit. This can happen a number of ways, one that is becoming more common is counterfeit money scams and committing fraud towards a financial institution. One of the most recent cases of counterfeiting is the the ring of five men that circulated six million

Financial institutions work with a large amount of data, often sensitive information. The computer software banks use are quite complex, which makes them a target for fraud and