Financial Crime World

Bank Fraud on the Rise: Experts Warn of Increased Scams Amidst COVID-19 Pandemic

As the world grapples with the economic fallout of the COVID-19 pandemic, financial experts are sounding the alarm over a growing threat: bank fraud.

The Rising Threat of Bank Fraud

According to a recent study, over 60% of companies expect an increase in fraud as a result of the global financial crisis. This phenomenon is not new; previous recessions have also seen a surge in fraudulent activities. “When economies decline and employment rates fall sharply, fraud tends to rise,” said an expert in the field of criminal offenses and compliance.

Banking Institutions at Risk

Banking institutions are particularly vulnerable to bank fraud, with cyber security breaches and social engineering tactics becoming increasingly common methods used by fraudsters. In Romania alone, a recent case of fraud reported was initiated by the National Bank of Romania at DIICOT, resulting in data theft and financial losses.

The Challenge of Unprepared Compliance Professionals

The issue is compounded by the fact that many professionals working in compliance departments have not experienced a recession or economic slowdown while on the job. “Most likely, most professionals working in this field today have not experienced a real economic slowdown,” said an expert. “Their experience and internal literature of organizations regarding money laundering are generally limited, largely covering only periods of economic boom.”

Recommendations to Combat Bank Fraud

To combat the growing threat, experts recommend that banks take proactive measures to increase internal control and audit, as well as utilize modern technologies and econometric models to identify security breaches or potential situations of fraud.

National and International Efforts

National and international institutions are also working together to find solutions, with central banks and regulatory bodies demanding greater accountability from financial institutions. “Banks are being held accountable for security breaches,” said an expert. “This is an important step for AML and KYC compliance in the banking sector.”

The Future of Bank Fraud

The issue of bank fraud remains a pressing concern for financial markets, with experts warning that it will continue to be a major threat in the years to come.

Sources:

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