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Key role of CFEs in banking fraud prevention?
- January 2, 2024
- Posted by: firstname.lastname@example.org
- Category: Blogs
A Certified Fraud Examiner (CFE) is a certified professional who holds the responsibility of investigating financial records to find evidence of fraud or other financial crimes. In addition to identifying, looking into, prohibiting, and mitigating fraudulent activity, they also create proactive solutions to stop bad actors from infiltrating companies. Although commercial banks and businesses employ certified fraud examiners, there are also numerous positions in government agencies, private auditing firms, and consulting organisations for professionals who hold CFE credentials.
However, in an industry as vulnerable to fraud as the banking sector, CFEs hold some key roles, including but not limited to
- Financial Reporting of Fraud: Also referred to as the deliberate falsification of financial accounts to deceive investors about the performance and profitability of a bank. Fraudulent financial reporting is fast rising to prominence of financial fraud, which defrauds investors out of millions of dollars. CFEs are trained to identify and investigate such frauds by leveraging best practices and updated means which is capable of preventing financial reporting.
- Preventing theft of proprietary organisational data and corruption: CFEs are well-versed in preventing theft that involves interfering with a company’s weak points to obtain an advantage, corruption is the abuse of authority and position for financial gain. Even though both of the contributing elements are within the company, theft is occasionally only the result of outside influences. A CFE with fraud examiner certification can develop plans to mitigate the effects of corruption and stolen data, protecting the company’s reputation in the process.
- Prevention of Fraudulent Disbursement: Disbursement fraud, the most prevalent kind of asset theft, happens when a firm employee takes advantage of their status and position to make a payment for an unauthorised reason. These are frequently referred to as “on-book fraud schemes,” in which a transaction trail with a record on books is created when cash or checks leave the organisation. A CFE is trained to identify and prevent such frauds from occurring in the first place.
- Tax Theft: Tax fraud not only attracts the notice of most headlines and a qualified fraud investigator, but it also piques the curiosity of the authorities. Tax fraud is when a person or organisation, usually a small business, falsifies information on their tax returns to avoid having to pay the full amount owed. Since tax evasion is considered the most serious crime, it is referred to as a felony and a CFE is fully trained to identify as well as support auditors on such fraudulent acts to protect banks from losing money.
- Online Deception: One of the most sophisticated frauds is internet fraud, which climbs the ladder to obtain extensive visibility into the financial, document, and personal data of an individual or business. It happens when online fraudsters target victims and employ a variety of strategies, including phishing, deep flakes, viruses, and more, to steal transaction data or personal information to significantly reduce their capital. A CFE not only identifies such frauds but also trains the employees to keep track of online deception cases.
- Fraudulent Expense Claim: Expense claims are reimbursements for expenses incurred by bank employees for work-related activities, such as lodging on business trips, professional lunches with clients or vendors, etc. When an employee inflates their expenses above what they cost, leading to receipt forgeries, or makes fraudulent claims for such expenses while lodging in less costly hotels or motels, it is considered expense claim fraud. They deduct the whole cost from the corporation and retain the balance for themselves, which a CFE is trained to identify and mitigate.
In one of their studies, ACFE noted that 26% of businesses, including the banking sector have begun using biometrics into their anti-fraud plans, and an additional 16% plan to do so. Banks may get actual, meaningful help with tools that are constantly improving and technologically oriented. A qualified fraud examiner combines data monitoring, surprise audits, artificial intelligence, and anomaly detection protocol tools with automated monitoring. When combined, these effective methods and technologies offer a potent mix for identifying, mitigating, and preventing fraud risk and the loss that goes along with it. By using such technologies for enhanced inquiry, a certified fraud examiner minimises costs while benefiting the bank.