2. Fraud
“A deliberate act of omission or commission by any person, carried out
in the course of a banking transaction or in the books of account
maintained manually or under computer system in banks, resulting into
wrongful gain to any person for a temporary period or otherwise, with
or without any monetary loss to the bank.”
4. 1) Liability Frauds
➢ Account opening
a) Account opening fraud – Account opening with fake documents e.g.
fake electricity bill, PAN card
b) Identity theft – Someone Impersonating the customer without his
knowledge or consent – Fraudster uses the personal information,
like name, address, contact numbers to commit fraud
c) Siphoning customers’ funds given for account opening – Account
opening cash not deposited, cheque deposited in different account
by changing payee name.
5. ➢ Cheque Frauds
• a) Alterations in cheque - Signature forgery (When a person forges
(copies) the customers signatures on documents / cheques it is called
“Forgery”)
• b) Material Alterations - Erasing/cutting information from the cheque
• c) Chemical Alterations - Chemical wash
• d) Fake instruments – Photocopies of instruments using advance
photocopier
6. • Example of Cheque Frauds (Materially Altered Instrument):
• Amount altered from Rs.1,30,000 to Rs.11,30,000
7. Measures to prevent Cheques Frauds
a) Scrutinize all cheques above 50k under UV lamp
b) Cheque beneficiary account for any regularity -Low balance -Zero or
Debit balance -High value transaction in newly opened account -
Inactive /dormant accounts recently activated 29
c) High value transactions to be referred to BM
d) Never be in a hurry to match the signature
8. ➢ Cash Frauds Type of cash fraud are a follow
• Cash shortages above Rs. 10 thousand
• Fake currency
• Cash theft
9. Measures to prevent cash frauds
• Recording denomination details on reverse of cheque.
• Ensure cash deposit slip is complete with proper details.
• Before acknowledgment to the customer CHECK
- Correctness of denomination.
- Total amount with physical cash received.
• Update I-core immediately while remitting cash to/from ICMC.
• Tally cash book & update I-core while transferring cash between tellers.
• Do not entrust office boys with the cash banding activity.
• Ensure CCTV cameras are functioning and the angle of camera is capturing
relevant areas.
• Cash to be kept in a manner that it is not accessed by any person from outside.
10. ➢ Internet frauds It includes
• Phishing – Fake emails asking for personal information such as usernames,
passwords. Such mails often directs users to a fake website whose look and
feel are almost identical to the legitimate one to enter details.
• Vishing - (voice or VoIP phishing) is an electronic fraud tactic in which
individuals are tricked into revealing critical financial or personal
information to unauthorized entities. ... A vishing attack can be conducted
by voice email, VoIP (voice over IP), or landline or cellular telephone.
• Scams -E-mails/SMS/letters from unknown sources offering; large sum of
lottery award, cheap loan offers, alluring, unbelievable returns on
investments, international loans, other similar schemes. The scamster
demands payment of fees/taxes/commission etc. in advance
11. Ways to prevent Internet Frauds
• Never respond to mails from an unknown address
• Never use the links in an email to get to a web page
• Avoid responding to emails asking for personal financial information
• Regularly check that all transactions are legitimate in your - Bank
account - credit and debit card statements
• Check URLs and business names for spelling errors
• ALWAYS REMEMBER: Bank will never ask for personal information via
email.
• Conduct due diligence.
12. Ways to prevent Internet Frauds
• Enquire about the a/c in which cash needs to be deposited.
• Find the source through which the person was approached for lottery prize
/ job scam- email / SMS / letter.
• Explain the customer / non-customer of online /SMS scam and the actual
working of the fraud.
• Do not disclose name/address/balance etc. of the transferee customer to
the complainant.
• Advise the victim to lodge FIR.
• Assure assistance in police investigations.
• Ask the complainant to forward the original mail to
antiphishing@icicibank.com.
13. 2) Card Fraud
Reasons for frauds by misuse of cards or related data:
• Lost/ stolen
• Wrongly delivered
• Discarded/Cancelled
• Applied but never received
• Copy of the card given for a fresh application or other purpose
14. Cash frauds includes Skimming
• Skimming is perpetrated by using a ‘forged’ card created with a
special devise.
• The devise scans a card inserted into an ATM or a POS machine.
• Confidential information is collected by electronically reading the
magnetic strip behind a credit/debit/ATM card with this device.
• The data is transferred to blank cards or used for online shopping etc.
15. 3D Secure
• 3D Secure is an additional pass-code which adds a layer of security to
card transactions.
• The code is self-created on the internet.
• A separate code is required for each card, even if it is an add-on or a
replacement card.
16. 3) Asset Frauds Precautions to be taken
• Ask the bank executive for proof of identity when he approaches you with the
loan offer.
• Do not handover the original documents with your application to dealers, agents
or executives.
• Keep photocopies ready to avoid misuse.
• Never sign blank forms.
• Check all the filled details with care before handing over the application.
• If you issue any cheques for charges/fees etc., remember to mark them ‘A/c
payee’ and issue them in favour of the bank only.
• If you do not get a revert about acceptance or rejection of the loan within a
reasonable time, call the bank and check the status.
• If you decide not to avail of the loan after submission of the document, inform
the bank immediately
17. 4) Internal Frauds It includes
• Sharing of customers information
• Siphoning of customers/banks funds
• Unauthorized use of other staff ids
• Fake bills
• Pocketing excess cash
18. Impact of Frauds Organization
• Financial and Reputation loss.
• Customers lose confidence in the bank.
• Diversion of management resources.
• Cost of external resources.
• Penal action by regulatory authorities (RBI).
Staff:
• Actioning on individuals perpetrating frauds in terms of financial
penalty / imprisonment.
• Termination from services.
19. Consequences of process lapses
• Any process lapses / negligence will hold you responsible for the
fraud.
• You as a maker/ checker / supervisory authority may also have to face
severe consequences.
20. When does bank report a fraud?
1) Customer complains of fraudulent activities in his account - Misuse
of ATM Cards, fraudulent debits in the account, etc.
2) Fraud attempts made by the fraudster at the branches.
3) Staff suspects an account holder of fraudulent activities.
4) Staff suspects another staff of fraudulent activities.
5) Staff has prevented a fraud.
6) Cash shortage cases above Rs.10 thousand.
21. Money Laundering
• Money laundering is a process of conversion of illegally obtained
money so as to make it appear to originate from a legitimate source.
The aggregate size of money laundering in the world could be
somewhere between two and five percent of the world’s gross
domestic product.
• Anti-Money laundering regulations refers to the initiatives taken by
the regulators and the governments across the world to ensure that
the banks and financial institutions do not facilitate attempts of
money laundering.
• Money Laundering (ML) is a process or activity connected with the
proceeds of crime and projecting it as untainted property.
22. Suspicious Transaction
• Suspicious Transaction means a transaction whether or not made in
cash which, to a person acting in good faith - Gives rise to a
reasonable ground of suspicion that it may involve the proceeds of
crime.
• Appears to be made in circumstances of unusual or unjustified
complexity.
• Appears to have no economic rationale or bonafide purpose. Gives
rise to a reasonable ground of suspicion that it may involve financing
of the activities relating to terrorism.
23. For e.g.
• Is this a suspicious transaction? Mrs. Gita, aged about 40 years, has
been operating a salary account with our bank since last four years.
• She is employed with a Fortune 500 company. She has also linked her
Demat and Trading account (3-in-1) to her salary account.
• Transactions in her account reveal investment in mutual funds, shares
and cash withdrawals through ATM.
• There is a sudden non cash deposit of Rs. 75 lakhs in her account and
subsequent debit through cheque.
• Inquiries with Gita revealed the source of funds to be proceeds of sale
of property and subsequent investment in a new property.
24. Types of Suspicious Transactions
1) Highly Cash Intensive Activity
2) Multi- Level Marketing Companies with no tangible product or
3) Financial products
4) Ponzi Schemes (Business of accepting loans and issuing preference
shares and reinvested in real estate)
5) Multiple Accounts
6) Large Inward Remittances followed with cash withdrawals below
threshold limits
7) Jama Kharchi
