Bank fraud is the use of intentional misrepresentations to fraudulently obtain money or assets from a bank. It often requires technical expertise and is considered a white-collar crime. Identity theft, check fraud, and employee fraud are common types. While technology has placed barriers, some fraud cannot be prevented.
Bank fraud refers to the use of intentional misrepresentations in order to fraudulently obtain money or other assets held by a bank or similar institution. It differs from simple bank robbery or theft, because the perpetrator usually commits the fraud in secret, hoping it won’t be noticed until he has had time to move forward. It also usually requires some sort of technical expertise. For reasons like this, bank fraud is one of the crimes referred to as a white-collar crime.
In most areas of the world, all types of bank fraud are illegal. One of the more prominent types of fraud is known as identity theft, in which a person uses another person’s privately identifying information to obtain money, usually in the form of loans or credit. Somewhat related to identity theft is identity fraud, where credit is obtained through the use of a completely fictitious identity. While identity theft and similar crimes get a lot of publicity, they are far from the only crimes involving bank fraud.
Frauds involving checks are also quite common. Forging checks or signatures on them, as well as altering checks that have already been written are two ways check fraud is committed. In the case of the latter, it could be as simple as adding a few strokes of a pen to turn a check for $100 US Dollars (USD) into one for $1,000 USD. Another common type of fraud is check kiting. This is any type of fraud that takes advantage of the fact that funds can be withdrawn on a deposited check before the money is actually removed from the check writer’s account.
Checking fraud has a history as long as that of checks themselves. Over the years, security features have been incorporated into many types of controls, especially payroll controls. These include unique watermarks, heat sensitive ink and extremely fine printed characters that are not easily detectable or forged. Technology has placed many barriers to those who would perpetrate bank fraud, but not all fraud can be completely prevented.
One type of bank fraud that is still difficult to detect or stop in time is that which is committed by bank employees themselves. In many cases, these acts are discovered only through a thorough audit of the bank’s accounting records, months after the termination, by which time it is too late to recover the lost funds. A comprehensive description of the many possible ways of committing bank fraud would be impossible, but suffice it to say that criminals have gone to great lengths and used considerable creativity to come up with new and different ways to steal and defraud.
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