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Home » Types of Bank Fraud in 2022- Explained with Examples

Types of Bank Fraud in 2022- Explained with Examples

PPT OF TYPES OF BANK FRAUD IN IS AVAILABLE AT THE END OF THIS TOPIC

Content
1. Meaning of fraud
2. Types of fraud in banking
3. DOWNLOAD PPT

1. What is the meaning of fraud

Any behaviour by which one person intends to gain a dishonest benefit over another person. In other words, the person who carries out a harmful, illegal, or immoral act is either a criminal offence or civil wrong.

2. TYPES OF BANK FRAUD

  1. Advance Fees Fraud
  2. Phishing Fraud
  3. Card Skimming
  4. Accounting data fraud
  5. Account opening fraud
  6. Cheque kiting
  7. Cheque fraud
  8. Counterfeit securities
  9. Bank hacking fraud
  10. Loan fraud
  11. Money laundering fraud
  12. Money transfer fraud
  13. Letters of Credit
  14. Telex Fraud
1. Advance Fees Fraud

An advance-fee fraud occurs when the victim pays money to someone in expectation of receiving something. such as receiving a loan, contract, investment, or gift and then receiving little or nothing in return.

Example – Fraudster doing calls as custom duty officer to random people to pay this amount via bank and get your order clearance. Sometimes, people get trapped by thinking they really got a gift but in end, people end up losing the money and getting nothing.

2. Phishing Fraud

Phishing is an online scam that uses to steal private user data which includes login details, OTP, Passwords, and credit card numbers. Moreover, Phishing can be done by giving bank details to fake emails, texts, phone calls.

For example- Fraudsters often call people to renew their bank account or credit card, to get bank account details and OTP from their victims so they can commit fraud.

3. Card Skimming

Card skimming is a method used by fraudsters to record information of people’s payment cards like debit and credit cards to conduct fraudulent transactions.

Example- Fraudsters do this type of fraud by capturing your payment card information by way of copying is known as a skimmer. The information will be stored and transferred to an appointed computer so can be used later for fraudulent activities.

types of bank fraud
Skimming fraud in types of bank fraud
4. Accounting data fraud

In order to hide some serious financial problem. Some companies use fraudulent bookkeeping to overstate the sales, profit, and worth of the company. When the company is operating at a loss. These fake records can help the company to get loans from a bank etc.

5. Account opening fraud

Account opening fraud means opening a bank account to deposit and cashing fraudulent cheques. This fraud is one of the most common frauds in the world. Moreover, mostly these accounts are opened with fake proofs so no one can get busted.

Example:- An bank account opens to send illegal money to another account or a fake account to get benefits from the government like the name of the old aged person to take advantage of pensions.

6. Cheque kiting

Cheque kiting is the illegal process of writing a cheque off to a bank account with inadequate funds to cover that amount. This relies on the fact that it takes banks a few days (or even longer for international checks) to determine that a cheque is bad.

Example- Deposit 1000 in one bank, write a cheque on that amount and deposit it to your account in the second bank, you now have 2000 until the cheque clears.

7. Cheque frauds: There are three main types of cheque fraud:

  1. Counterfeit- a simple paper made into the same as bank cheque paper to make a real cheque but it relates to a real bank account, which has been created and written by a fraudster.
  2. Forged- This fraud is related to a stolen real cheque and not signed by the account holder. The fraudster has signed the signature on the cheque themselves.
  3. Altered- a cheque that has been properly issued by the account holder but has been altered or changes made by fraudsters like the payee name or the amount of the cheque have been altered.
8. Counterfeit securities

Documents, securities, bonds, shares, and certificates are forged, duplicated, adjusted, or altered are presented to a bank to get a loan by using these securities as collateral.

9. Bank hacking fraud

Hacking and tampering with a Computer to gain access to bank data for illegally transferring money, deposits, removing any transactions entry. Though, Computer fraud can be happened by spreading malware or by hacking bank computers or systems.

10. Loan fraud

Loan fraud means when funds are lent to a borrowing customer that has exceeded his credit limit or a non-borrowing customer.

Example- When individuals present false information in order to obtain a loan, that is loan fraud. Similarly, if a thief uses someone’s identity to get a loan in name of that person, that is another type of loan fraud.

11. Money laundering fraud

Money laundering is illegal obtained money and deposits the money in banks by converting the cash into untraceable transactions. Fraudsters try to make the funds look as though they have come from a legal source.

For example– If someone is selling drugs, they may try to pretend that the cash is from a business, and they may deposit the funds in that business’s account. For more detail Visit- Stages of Money Laundering

12. Money transfer fraud

Scammers use a lot of schemes to get your money by using money transfers through companies like Western Union and Money-Gram. Scammers create pressure on people to use money transfers as quickly, so fraudsters can get the money before that victims realize they’ve been cheated.

Money transfers are online cash transfers same as sending cash and there are no protections for the sender. At last, there is no way any person can reverse the transaction or trace the money.

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13. OTP Fraud

The OTP messages that are passed through telex in form of codes could be altered to divert the funds to another account so that code could help fraudsters to make fund transfer.

14. Letters of Credit

Letter of credit is generally used for taking importing goods on credit. This is mostly used in international trading. Letters of credit fraud are mostly tried against banks by providing false documentation showing that goods were shipped but In fact, no goods were shipped. Tips to avoid – click here

Read More- Recent trends in banking (PPT is available)

3. DOWNLOAD PPT FOR TYPES OF BANK FRAUD AND CYBERCRIME

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