Successfully reported this slideshow.
Fraud
Preven+on,
Detec+on,
Management
                                    

                     Girlie
Lopez
            ...
•  DEFINED

   –  A
decep.on
deliberately
prac.ced
in
order
to
secure

      unfair
or
unlawful
gain
or
causing
loss
to
an...
DIFFERENT
FACES
OF
FRAUD

Possible
Perpetrators

       Fraud
Type
                                               Other

                           ...
Possible
Perpetrators

   Fraud
Type
                                          Other

                    Borrower
 Center...
Possible
Perpetrators

    Fraud
Type
                                             Other

                        Borrower...
Possible
Perpetrators

     Fraud
Type
                                            Other

                        Borrower...
Possible
Perpetrators

     Fraud
Type
                                             Other

                         Borrow...
Possible
Perpetrators

      Fraud
Type
                                             Other

                          Borr...
HANDLING FRAUD
While fraud cannot be totally eliminated,
 it can be prevented and controlled.
•  Essen.al
components
why
fraud
occurs

   –  Mo.ve

   –  Opportunity

   1. Internal
control
systems
are
loose

   2. P...
•  “Ul.mately,
reducing
the
risk
of
fraud
is
a
ma=er

   of
good
management,
of
crea.ng
a
work

   environment
that
reduce...
•  Tips:

   –  Minimize
mo)va)on
to
commit
fraud:

   
 Ins.tu.onalize
a
culture
of
professionalism,
to
include

      ho...
•  Main
ways
in
which
fraud
may
be
uncovered:

   1.  Discoveries
by
management,
usually
emerging
from

       management
...
•  Tips:

   –  Check
proper
implementa.on
of
management
controls

   –  Do
documenta.on
checks


   –  Do
trend
analysis
...
•  Managing
the
Inves.ga.on:

  –  Consider
how
to
minimize
any
further
loss;

  –  Ensure
that
adequate
resources
are
pro...
•  Recovery
of
Loss:

   –  Quan.fy
any
loss
and
account
for
affected
loans/
      deposits

   –  Seek
recovery
of
losses
...
•  Public
Rela.ons:

–  Coordinate
any
public
rela.ons
work

–  Decide
and
manage
informa.on
dissemina.on

–  send
a
clear...
•  Aher
the
Inves.ga.on:

   –  Iden.fy
system
weakness/es

   –  Assign
responsibility
for
making
changes
to
address

   ...
FRAUD:

Can
be
prevented,
detected
and
managed



       Maraming Salamat po!
Upcoming SlideShare
Loading in …5
×

Fraud Prevention Detection and Management

1,640 views

Published on

Published in: Business, Economy & Finance
  • Be the first to comment

Fraud Prevention Detection and Management

  1. 1. Fraud
Preven+on,
Detec+on,
Management 
 Girlie
Lopez 
 MABS 
 2010
RBAP‐MABS
Na.onal
Roundtable
Conference
 Hya=
Hotel
and
Casino,
Manila
 June
2‐3,
2010

  2. 2. •  DEFINED
 –  A
decep.on
deliberately
prac.ced
in
order
to
secure
 unfair
or
unlawful
gain
or
causing
loss
to
another
party
 •  Fraud
may
originate
from
clients
and/or
 employees
of
the
bank.
 •  Fraud
can
happen
in
all
stages
of
the
loan
process
 –
loan
solicita.on,
collec.on,
account
monitoring,
 and
delinquency
management.


  3. 3. DIFFERENT
FACES
OF
FRAUD

  4. 4. Possible
Perpetrators
 Fraud
Type
 Other
 Borrower
 Center
 AO
 Supervisor
 Others
 Officers
 Bank
Staff
 “Ride‐on”
Loans 
  
 
  
 
  
 
  
 
  
 
 
Bribes 
  
 
  
 
  
 
  
 
 Commissions 
  
 
  
 
  
 
  
 
 “Processing
Fee” 
  
 
  
 
  
 
 Over‐appraised
collateral
  
 
  
 
 Dummy
Accounts 
  
 
  
 
  
 
  
 
 Ghost
Accounts 
  
 
  
 
  
 
  
 
 False
iden.fica.on
  
 
  
 
  
 
  
 

  5. 5. Possible
Perpetrators
 Fraud
Type
 Other
 Borrower
 Center
 AO
 Supervisor
 Others
 Officers
 Bank
Staff
 Recycled
Borrower 
  
 
  
 
  
 

  6. 6. Possible
Perpetrators
 Fraud
Type
 Other
 Borrower
 Center
 AO
 Supervisor
 Others
 Officers
 Bank
Staff
 Non‐remi=ance
 
  
 
  
 
 of
collec.on
 Non‐issuance
of
OR
  
 
  
 
 Altering
OR
details 
  
 
  
 
 Fake
OR
  
 
  
 
 Lapping
  
 
  
 
 
Cashing‐out
cheques 
  
 
  
 
 “Hold‐up” 
  
 
  
 
 Altering
MIS
records
  
 
  
 
  
 

  7. 7. Possible
Perpetrators
 Fraud
Type
 Other
 Borrower
 Center
 AO
 Supervisor
 Others
 Officers
 Bank
Staff
 Inten.onal
Mispos.ng
  
 
 Unauthorized

  
 
  
 
  
 
 withdrawal

  8. 8. Possible
Perpetrators
 Fraud
Type
 Other
 Borrower
 Center
 AO
 Supervisor
 Others
 Officers
 Bank
Staff
 Non‐remi=ance
of
  
 
  
 
 penalty
fees 
 Unauthorized
 restructuring
or
  
 
  
 
 extension 
 “Foreclosure
scams” 
  
 
  
 
 Wri.ng‐off
recoverable
  
 
  
 
 accounts 

  9. 9. Possible
Perpetrators
 Fraud
Type
 Other
 Borrower
 Center
 AO
 Supervisor
 Others
 Officers
 Bank
Staff
 Overclaiming/
 
  
 
  
 
  
 
 False
claim
of
expenses 
 Stealing
discounts 
  
 
  
 
  
 
 “Private
Business” 
  
 
  
 
  
 
  
 
 False
benefit
claims 
  
 
  
 
  
 
  
 
  
 
 Financial
reports
  
 
 manipula.on 

  10. 10. HANDLING FRAUD
  11. 11. While fraud cannot be totally eliminated, it can be prevented and controlled.
  12. 12. •  Essen.al
components
why
fraud
occurs
 –  Mo.ve
 –  Opportunity
 1. Internal
control
systems
are
loose
 2. Policies
are
not
being
followed
 3. Managers
and
owners
run
the
business
on
the
basis
of
 “trust”
rather
than
“sound
internal
controls”
 •  The
benefits
of
preven.on
outweigh
the
costs. 

  13. 13. •  “Ul.mately,
reducing
the
risk
of
fraud
is
a
ma=er
 of
good
management,
of
crea.ng
a
work
 environment
that
reduces
the
incen.ves
for
 employees
to
commit
fraud.”

 Richard
Hook 
 Microenterprise
Development
Brief,
June
1995. 

  14. 14. •  Tips:
 –  Minimize
mo)va)on
to
commit
fraud:
 
 Ins.tu.onalize
a
culture
of
professionalism,
to
include
 honesty
and
compliance
 –  Close
the
window
of
opportunity
to
commit
fraud:
 
 Evaluate
your
bank’s
Internal
Control
System
 effec.veness,
its
policies
and
implementa.on,
based
on
 iden.fied
risk
areas.

  15. 15. •  Main
ways
in
which
fraud
may
be
uncovered:
 1.  Discoveries
by
management,
usually
emerging
from
 management
monitoring
and
controls;
 2.  Rou.ne
policies/system
or
specific
audit
checks;
 3.  Opera.ons
review;
 4.  A
“.p”
from
a
concerned
individual
–
either
internal
 or
external
party
 •  Learn
to
“think
like
a
thief
to
catch
a
thief”

  16. 16. •  Tips:
 –  Check
proper
implementa.on
of
management
controls
 –  Do
documenta.on
checks

 –  Do
trend
analysis
 –  Review
properly‐generated
MIS
reports
 –  Have
competent,
courageous,
and
efficient
auditors
 –  Do
regular
opera.ons
review
–
preferably
not
from
the
 opera.ons
team
 –  Do
field
valida.on
visits
 –  Set‐up
customer
hotlines


  17. 17. •  Managing
the
Inves.ga.on:
 –  Consider
how
to
minimize
any
further
loss;
 –  Ensure
that
adequate
resources
are
provided
to
carry
 out
the
inves.ga.on;
 –  Subject
to
appropriate
disciplinary
procedures
from
the
 Human
Resource
directorate;
 –  Iden.fy
and
preserve
all
original
documents
and
other
 exhibits
rela.ng
to
the
intended
complaint

 –  Submit
.mely
reports
to
management,
third‐party
 stakeholders,
and
regulators
 –  Define
the
.meline
from
report
submission
to
 implementa.on
of
sanc.ons

  18. 18. •  Recovery
of
Loss:
 –  Quan.fy
any
loss
and
account
for
affected
loans/ deposits
 –  Seek
recovery
of
losses
from:
 1.  Bonds
–
fidelity,
property,
cash
 2.  Personal
assets
 3.  Legal
ac.on

  19. 19. •  Public
Rela.ons:
 –  Coordinate
any
public
rela.ons
work
 –  Decide
and
manage
informa.on
dissemina.on
 –  send
a
clear
and
firm
message
that
fraud
is
taken
seriously
 and
will
not
be
tolerated


  20. 20. •  Aher
the
Inves.ga.on:
 –  Iden.fy
system
weakness/es
 –  Assign
responsibility
for
making
changes
to
address
 weaknesses.
Set
an
ac.on
plan.
 –  Check
if
revisions
were
made
and
if
these
revisions
are
 working
efficiently


  21. 21. FRAUD:
 Can
be
prevented,
detected
and
managed
 Maraming Salamat po!

×