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Bank Fraud – Attacks From Inside and Out…

According to US federal law, bank fraud is knowingly committing or trying to commit some deceitful scheme to…

1. Defraud a financial institution; or

2. Obtain funds, assets, credits, etc., under the control or custody of a bank or financial institution

through fraud, misrepresentation, or false promises.

The maximum penalty for bank fraud is million. The maximum punishment is 30 years. The court may mete out one or the other or both.

Not Necessarily a Bank

Although the crime is called “bank fraud”, it’s a mistake to assume that the law applies only to fraud against banks or financial institutions. The second subsection of the law also includes funds that are in the “control or custody” of the bank. So the bank need not be the loser in the fraudulent act.

For instance, a perpetrator engages in fraud that results in victims mailing him checks, which he cashes at a bank and pockets. The perpetrator could be charged with bank fraud. Forging checks (or the endorsements on them) could also be subject to charges of bank fraud.

Making False Statements

Federal prosecutors often charge perpetrators of bank fraud with making false statements to financial institutions. Making such false statements is defined as

1. Knowingly making a false statement, or overvaluing property

2. To influence in any way

3. The action of a bank or financial institution.

This is also a federal crime and carries the same maximum penalties as bank fraud.

Insider Bank Fraud

There are seven bank fraud schemes commonly perpetrated by persons operating within a financial institution. These are

1. Demand draft fraud – Typically perpetrated by a corrupt bank employee who makes a demand draft payable at some distant location without debiting any account. It’s cashed at the remote branch.

2. Forging or making fraudulent documents – Usually done to conceal a theft

3. Identity theft – A corrupt bank employee may give personal info to an identity thief who could obtain credit under the victim’s name.

4. Making fraudulent loans – A bogus company or one that soon declares bankruptcy takes out a loan with the collusion of a corrupt bank officer.

5. Rogue trading – Perpetrated by a highly placed bank exec, rogue trading involves using the bank’s funds to make speculative investments to make a quick profit. If the speculation pays off, the rogue trader pockets the profits. If losses come one after another, a scandal may ensue, and/or the bank may collapse.

6. Uninsured deposits – Some banks are not licensed to operate and are therefore uninsured (or vice versa). For instance, in 2002, a Washington bank called Chase Trust Bank was found to have no license after it was exposed to be unrelated in any way to New York’s Chase Manhattan Bank.

7. Wire fraud – Banks use wire networks to conduct business among themselves. Wire transfers are nearly impossible to undo and are thus vulnerable to corrupt insiders.

Outsider Bank Fraud

Following are a dozen common schemes perpetrated by people who are usually outside the financial institution, but nonetheless charged with bank fraud:

1. Accounting fraud

2. Booster checks, where un-cleared checks are credited to boost a credit balance

3. Check kiting, where cash that’s in transit (i.e., nonexistent) is stolen

4. Duplicating or skimming card data, copying magnetic stripe info off a card for duplication

5. Forgery or altering checks

6. Fraudulent loan applications

7. Identity theft

8. Internet fraud

9. Money laundering

10. Prime bank fraud

11. Stealing checks

12. Stealing payment cards

We all want to think we are safe but are we? If you want to know more about the different types of crimes committed today, is offering FREE ACCESS to its Criminal Records Information section. If you have a nagging suspicion on someone, run a criminal check on him or her today!

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New Property and Casualty Insurance Fraud Detection Service Announced


CHARLOTTE, N.C. (PRWEB) September 20, 2006

ECS Reporting Solutions has announced the availability of online services, designed to help the insurance industry to identify and prevent fraud.


Property and casualty insurance fraud is estimated to cost the insurance industry as much as $ 30 billion per year. Attempted check fraud at the nation’s banks rose to $ 5.5 billion according to the 2004 American Bankers Association Deposit Account Fraud Survey Report. Fraud prevention is a major concern for banks, financial institutions, insurance companies, and government organizations.


The ECS gateway system can be used to create customized reports, notifications and digital dashboards designed to identify and prevent fraud. This enables users to extract information such as claimant profile data, previous loss history data, and almost any other information that can be used to identify possible red flags of fraud.


ECS has virtually unlimited public records databases, and partnerships with leading business intelligence software providers, to provide cutting-edge data mining capabilities, according to information from the company web site at


ECS Reporting Solutions also provides affordable consulting and training services for organizations that require additional assistance in developing their reporting solutions. They have a staff of insurance and reporting professionals that can provide expert advice on how to proactively identify and prevent fraud.


Organizations that need help to implement these solutions can get assistance through the consulting and training services provided by ECS. Advice and instructions on how to proactively identify and prevent fraud are included.


“We have been able to create a suite of services that are available to assist insurance organizations to expand their business intelligence capabilities. Using the latest technologies combined with our public records gateway service, we are able to make these services effective, convenient, and far more affordable than other solutions,” explained Sara Morrison of ECS.


While insurance fraud is recognized as a growing problem, insurers are caught between many competing and potentially conflicting needs. Insurers face the challenge of processing claims quickly to comply with government regulations, and also identifying possible fraud.


“It is critical for insurers to minimize claim settlement and payment costs through early fraud detection. ECS can assist organizations with integrating the results of customizable analytics to detect fraud early in the claims process. Claims with high fraud scores are routed to investigators for further analysis. This allows insurers to efficiently manage investigative resources so investigators are focused on the claims that are most likely to be fraudulent. We help insurers to decrease set up and maintenance costs by avoiding high risk customers,” explained Morrison.


About ECS Reporting Solutions:


ECS Reporting Solutions offers strategic business intelligence services for the insurance industry. Clients receive customized reporting services that include custom reports and digital dashboards aimed at detecting and preventing fraud.


Press Contact:


Sara Morrison




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