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Internal fraud

The act committed by an employee, like moving the funds between the accounts or giving falsified information in monthly reports, leads to internal fraud. The most common type of theft through such activities is siphoning funds from dormant customer accounts.  

It happens due to a lack of segregated duties and oversight. In such cases, the employees abuse their authority, gain access to critical information related to the organisation, and indulge in suspicious activities. 

For example, they apply their powers to authorise credits to clients they know and sometimes breach policies to get the information they can tell others. 

They may indulge in money laundering or procurement fraud (where the employee facilitates an illegal transaction between a vendor and a supplier).

Such crimes lead to theft of customers' IDs (data theft) or account takeover. The stolen data is used to withdraw funds or conduct various forms of transactions without customers' knowledge. 

How To Protect?

  • The firm should monitor the activities of the employee and check all the related accounting irregularities.

  • Employees are allowed to access customer's accounts; however, the firm should investigate if they try to gain access to accounts like frequently checking the high net worth or VIP accounts or after-hours customer details, which is beyond the scope of the job.

  • Firms should have internal fraud technology solutions to pick up immediate threats. In addition, they should employ systems to interpret the behaviour of the workers to prevent such activities. 

  • The employment rules should be updated according to the changes in current working circumstances to handle irregularities or misuse of powers.

Date Published: Feb 11, 2022

Types of fraud

A-Z of fraud

To help understand which fraud you've been affected by, we've categorised them into an alphabetical list.

What is fraud and cyber crime?

Cybercrimes can be of two types. First, it can be cyber dependent, where the fraudsters use online devices to convince the victim to accept their offers.

Advance fee fraud

If you are trying to get a loan for a house or a car, they ask to meet the provider to get the financing arrangement and pay the finder's fee in advance.

Corporate fraud

Corporate frauds can be complicated, committed either by the firm or an individual. Nevertheless, it mostly involves cheating where the employee or the firm.

Individual fraud

There are many types of individual frauds related to advance fees, investments, insurance brokers, bogus tradespeople, Ponzi schemes, pension liberation.

Online fraud

Hence the number of cases of online fraud is increasing each year, and most such cases include – account takeover, direct frauds, or scams related domain names.

Identity fraud and identity theft

The criminal uses the stolen identity of another person living or deceased to conduct unlawful activities like obtaining goods or services in another's name.
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