Whistleblowing and Internal Controls: Indonesia’s Banking Sector Fights Back Against Fraud

Indonesia’s banking sector has been battling the Issue of Fraud and Financial Crimes Perpetrated by Employees. A recent study investigates the effectiveness of anti-fraud strategies in preventing such incidents within the Indonesian banking industry.

Research Methodology

The research utilized a questionnaire and interviews with key personnel, including accounting officers, marketing departments, customer services, tellers, operational supervisors, and risk management teams in various Indonesian banks. A total of 217 complete responses were recorded for analysis.

Impact of Anti-Fraud Strategies

To understand the impact of anti-fraud strategies, researchers employed a path analysis technique using the WarpPLS program. The findings unequivocally demonstrate that anti-fraud strategies significantly enhance fraud prevention efforts.

Measures Against Fraud

Effective anti-fraud strategies in Indonesia’s banking sector have been implemented through various measures:

• Whistleblowing Policies: Strong whistleblowing policies have been adopted, emphasizing the protection of whistleblowers and expediting potential fraud disclosures.
• Internal Controls: Meticulous implementation of internal controls within activity units and optimal functioning of risk management teams have been instrumental in preventing fraudulent activities.

Modified Situational Crime Prevention Theory

The modified situational crime prevention theory has also shown positive results, serving as a powerful tool against financial crimes.

Bank’s Initiatives

Banks have increasingly taken steps to discourage potential fraudsters:

• Raising Awareness: Raising awareness of diminished benefits in comparison to high risks and stringent sanctions against perpetrators.
• Limiting Opportunities: Establishing procedures to limit opportunities for fraudster actions.
• Strict Disciplinary Framework: Establishing a strict disciplinary framework.

Conclusion

Indonesia’s banking sector, through enacting robust anti-fraud strategies and leveraging the strengths of the modified situational crime prevention theory, has successfully created an environment unattractive for fraudulent activities. This serves as testament to the sector’s commitment to maintaining trust and transparency for its clients.

• Religiosity as a Moderating Variable: One unique revelation has been the role of religiosity as a moderating variable, which significantly improves the impact of anti-fraud strategies.