The Best Method For Detecting Insider Bank Fraud

The Best Method For Detecting Insider Bank Fraud

In 2020, the FBI arrested an Amazon employee after issuing more than $96,000 in fraudulent refunds. To achieve this fraud, the Amazon insider created multiple buyer accounts to purchase electronics through Amazon’s platform. Due to his position as a trusted insider, he was able to issue refunds to himself without returning the product. Of course, not only was Amazon itself a victim of the fraud, but its banking institutions were as well.

Insider fraud is growing costly

The total cost per incident of insider fraud across all industries has now reached over $700,000. Today, every organization is susceptible to losing up to 5% of yearly revenue due to insider frauds.

But perhaps no industry is more susceptible to insider frauds than the financial services industry.

What Is Insider Fraud?

As its name suggests, insider fraud is a type of threat that originates from inside the organization. These frauds can be committed by current or former employees, contractors, business partners, or anyone else with knowledge of the institution’s inner workings. Typically, insiders use their positions to access valuable data or tasks, like processing payments, or bank customer account information and customer PII.

Keep in mind, not every insider fraud is intentional. Many “frauds” occur as a result of negligence or human error. Still, even these insider “frauds” can cost financial institutions millions.

Methods To Detect Bank Fraud

Insider frauds aren’t a new phenomenon. In fact, financial institutions and banks have always been at risk of fraud since their inception. And it’s no wonder why. Insiders at financial institutions have historically had access to massive quantities of money. The temptation to steal it has overwhelmed even the most honest of employees.

But today, due to advancements in technology, banks and financial institutions have become even more vulnerable to the risk of insider fraud.

Why? It’s become much more difficult to detect.

Since physical bags of cash are no longer the target, oftentimes data is, many sophisticated insider fraudsters can operate clandestinely for years.

Because of this, it’s now more important than ever that banking institutions be vigilant about detecting insider fraud and utilize technologies that can help prevent it.

The best method for detecting insider banking frauds.

There are far too many financial organizations that utilize legacy fraud detection systems that don’t discover or prevent fraud in real-time. These organizations may scour and analyze “batched data” to find any problems within their systems. However, batched data is generally analyzed after an insider has already committed fraud, making this method unreliable and not timely in preventing insider bank fraud.

Moreover, many modern insider bank frauds go undetectable as insiders use real customer or member data to issue loans, transfer money and open new lines of credit. The problem is, even though fraud is being committed, these acts may seem legitimate when analyzed by fraud teams in batched data. Unfortunately, many frauds like these are often only discovered by the banking customer, after his or her account has been drained.

Fortunately, contemporary tools that are powered by artificial intelligence, such as ToolCASE’s solutions, can examine, in real-time, huge amounts of data points to detect any anomalies in your banking system. Not only can ToolCASE monitor transactional data for outside threats but can monitor for insider intrusions in real-time as well.

Employee Monitoring Systems

In addition to investing in real-time Ai-driven solutions to detect and prevent outsider frauds, you should also utilize the ToolCASE capability to monitor and track your employees’ actions within customer and corporate accounts, in real-time. ToolCASE’s real-time Ai tools could help detect unusual transactions and data discrepancies within individual accounts and notify fraud and risk teams almost immediately of this activity… and which employee may have accessed the account.

Monitoring customer and member accounts, knowing which insiders have access, and exactly who has accessed them (when and why), is a primary fiduciary responsibility of all financial institutions.

Apply Clear Cybersecurity Policies

By applying clear cybersecurity policies and tools, you can reduce the odds of insider fraud within your organization. For one, with the proper protocols and tools, most insiders may find it difficult to hack into your system. And those who can, could be near-instantly detected doing so by ToolCASE’s real-time Ai. Having iron-clad cybersecurity policies and updated cybersecurity systems helps ensure that all of your valuable customer data and their personally identifiable information are better secured.

However, it’s not enough to just apply clear cybersecurity policies. You must also inform all employees about them. Doing so will allow them to know the importance of following protocols, as well as the consequences of breaking them.

Moreover, to ensure your employees will handle your company’s systems and data securely, your cybersecurity should be:

  • Consistently enforced: This ensures that all employees will follow and adhere to your cybersecurity policies. You can enforce such policies through education, seminars, training, and quizzes.
  • Up-to-date: Since cybersecurity is always evolving, make sure that your policy is always updated, preventing any new threats that may come your way.
  • Carefully explained: By thoroughly explaining your cybersecurity policies, employees will know the purpose behind these policies in the first place, which is to safely secure the institutions and its customer’s assets.
  • Capabilities noted: Your employees should know that with ToolCASE Ai solutions, you have the ability to detect insider frauds in real-time. There may be no better deterrent to insider fraud than the threat of being caught in the act by ToolCASE.

Detect and Prevent Insider Fraud

Insider fraud is one of the biggest threats to every organization, most especially the financial services industry. By incorporating real-time, artificial intelligence-based fraud detection and prevention systems from ToolCASE, your fraud and risk teams could potentially reduce both external and insider fraud costs significantly.

For a full demonstration of ToolCASE’s remarkable insider fraud detection and prevention tools, simply contact us HERE

Or call 1-888-TOOLCASE