Fraud Indicators In Banking

The Exposure of Fraud In banking sector will always remain high due to financial products offered by bank, Management always try to focus more in avoidance of fraud, despite of high focus chances of fraud will always be there, Actually management learn the tactics through the past experience and create their internal polices and procedures according to them. So through this article we discuss some Red flags/Indicators of fraud briefly for knowledge purpose, and believe me each one of them may create high reputational as well as financial risk.

Habitual Late Sitting:

Most of the bankers may disagree with that, but as per research Top management always show negative perspective regarding Habitual Late Sitting, the question is why it is included in Fraud Indicator, The answer is why there is a need of Habitual Late Sitting, You have official banking hours to finalize your work. It means you are hiding something from other branch employees and waiting for late hours for finish work which may deals in fraudulent activities.

Password Sharing:

In Banking Password sharing comes under the umbrella of Zero-Tolerance, Management may never think twice to fire/ terminate you if you commit this crime in any stage of your career, Password Sharing in banking is a Red flag because if you are a authorizer in branch and you share your password with your cashier, He / She may post any entry and Supervise the same with your password, in result will be big financial loss/Fraud for bank   

Providing Incomplete Information To H.O/Management:

It is also a Red Flag Indicator of Fraud, because in this employee is concealing the facts from Management, in this way employee is also breaching the trust of employer for his personal financial benefits which leads toward fraud.

Not Availing Mandatory Leaves:

Employees who perform any fraudulent activity will not take mandatory leave, the reason behind this they don't want to leave their table for new comer because when any employee go for annual leave their backup employee will take charge for certain Mandatory leave period, and in this period he/ she can be exposed for the fraud the he commit.  So if any employee never show interest for annual leave this may lead for Fraud Indicator Or Red Flag.

Unreconciled Entry Since Long:

Reconciliation is very important in banking, If Management found any Unreconciled entry in bank suspense GL, This thing may trigger the chances of Fraud Activity, That is the reason Head Office always send reminders to branches to keep Suspense GL Balance and Error Free.

Flying Entry:

Flying entry is very suspicious in banking and it may leads toward the big fraud / Financial loss is not traced timely, Actually Flying Entry is the transaction without any justification or record. So it is also one of the fraud indicator in banking.  

If we focus above Red Flags Fraud Indicator in our career this is for sure that we can make our life easy and save our self from any fraud activity. and for Middle level management it is very good indicators for them to keep their employees on track and guide them accordingly to keep them away from Fraud, and if Found any employee doing above any activity it is their responsibly the report top management/ Senior Management Timely.       

Precautions To Be Taken At The Time Of Cash Payment

In Banking one the most risky thing is Cash Payment, Cash officer need to active, alert and vigilant while doing cash payment to customer, as once you give extra cash to customer the maximum chances will be you need to pay it from your own pocket, So the risk of financial damage is very high in Cash payment, However if we observe certain precautions at the time of Cash Payment, we can save our self from big financial damages.

• Always keep yourself Calm while performing any cash payment transaction, there is no any need to doing transaction in hurry.
• Examine the Instrument ( Cheque ) Carefully, following are the things you need to examine in cheque before processing it on system, 1. Open Or Crossed 2. Bearer or Ordered 3. Date 4. Overwriting 5. Signature 6. Mutilated 7. Word and Figure Should be matched . So in this way you need to carefully examine these major thing before processing it on system.
• Confirm Genuineness of Cheque in UV Lamp if the cheque is Above RS 100,000/=
• Confirm Genuineness of Cheque Through IV Marker if the cheque is Above RS 1,000,000/=
• Copy Of CNIC Should be Originally Seen, 
• Always Ask Copy Of CNIC From Customer For Online Cheque (Other Branch Cheque) Irrespective of amount.
• Signature Should be carefully checked and verified from concern branch staff.
• Always conduct CBC (Call Back Confirmation) From Customer If the Cheque amount is more than Rs 100,000/= or banker May conduct CBC if he found something wrong in cheque, So For confirmation banker may conduct CBC.
• Photo Account Signed / Thumb Should be in the presence of Bank/Branch Officer. 

  These are major precaution to be followed at the time of Cash Payment, As these things may safe you big financial loss.

Precautions To Be Observed While Account Opening

Customer-Banker relation starts with Account Opening, and believe me this is a point where banker need to be very much careful and vigilant. Currently regulator are imposing huge penalties on FDI, Banks due to non compliance in account opening especially, therefore special care should be taken from banker while doing account opening in order to avoid penalties.

So in this article we will discuss exactly what precautions to be taken at the time of account opening, whether you are in HBL, Bank Islami, Bank Al Habib, Meezan Bank, Alfalah Bank or any other being a Account Opening Staff you have to follow these precautions in order to avoid penalties.

• To me Account Opening Should be start with the most important thing in banking which is KYC (Know your Customer), Always try to obtain maximum information from customer so you can give best product as per his/her requirement, In this stage we should not wait for the customer to tell himself about the basic information but being a banker we need to ask from customer to tell the basic information. i,e, About customer geographic, Income, Source of income ETC
• Most of The time banker do not fill the Account Opening Form Properly, which create problem for him as well. So While doing Account Opening banker should need to fill Account Opening Form Properly and error free, and do not skip the things, always try to fill it completely because each and every information of customer is important.
• Signature of the customer should be same as on SS Card and AOF and all the signature should be matched as per Customer CNIC, if customer signature is different from CNIC, Always obtain Signature Different From CNIC Undertaking.
• Always obtain Photo Account undertaking for Photo Account.
• While Opening Customer account banker need to be very much careful while inputting customer address as the address should be as per customer cnic, If Customer address is different from cnic always ask Utility bill for address verification or rent agreement.
• Always Verify customer Business address by means of Physical verification, Business Staff should go out for physical verification of business, for verify whether is customer business is really exist or not, if physical verification found satisfactory process the account.
• PEP Confirmation, Politically exposed persons accounts should be treated on high priority and processed after high management approval

These are basic precautions which are very important to be follow during account opening, as these simple precaution could save banker from big penalities.