Skip to main content

Looking for Valuant? You are in the right place!

Valuant is now Abrigo, giving you a single source to Manage Risk and Drive Growth

Make yourself at home – we hope you enjoy your new web experience.

Looking for DiCOM? You are in the right place!

DiCOM Software is now part of Abrigo, giving you a single source to Manage Risk and Drive Growth. Make yourself at home – we hope you enjoy your new web experience.

Fraud concerns and trends in 2022

Melissa Mantooth, CAMS
Patrick Thomas, CFE, CAMS
May 20, 2022
Read Time: 0 min

Fraud on alert for 2022

A review of SAR data, government agency releases, and fraud findings found these fraud concerns and trends to watch in 2022.

Would you like other articles like this in your inbox?

Fraud Concerns

Financial fraud post-pandemic

The landscape for fraud has expanded over the past two years, as concerns over PPP loan fraud spiked during the height of the coronavirus pandemic. The increase in fraud is a trend we expect will decline as pandemic concerns improve and PPP loan applications end. 

But as one trend declines, new fraud schemes may arise. Abrigo recently reviewed prior-year SAR data, government agency releases, and fraud findings reported by financial institutions across the United States. As a result, we compiled these fraud concerns and trends to watch in 2022.  

Starting Point

Fraud impact in 2021

Abrigo conducted a 2021 end-of-the-year survey that asked BSA/AML Officers at financial institutions for their input on fraud trends. The institutions surveyed varied in asset size from $250 million to over $5 billion. This range was intentional and ensured a large sample size to identify trends, similarities, and differences across all asset sizes and their approach to fraud prevention.

Asset sizes of institution weighing in on fraud practices 

The survey topics included fraud prevention tools, pain points and frustrations, and what enhancements users would like to see integrated within their current fraud solutions. Survey participants were also asked to rank the importance of fraud detection at their institution on a scale of 1 (lowest) to 5 (highest).

Is fraud protection important? Here is data from institutions

Key takeaways: 

  • Over 40% of respondents stated that fraud would be their institution's highest priority in the new year (2022). 
  • Over 80% rated fraud importance as a 4 or 5, with 5 being the highest priority. 

These findings confirm what was found in granular data and frontline reporting. Fraud concerns continue to grow across the financial services industry, and more importantly, institutions are finding value in detection and prevention to prevent fraud losses. 

Fraud prevention

BSA/AML resources and education

When discussing and researching the latest fraud trends and news, respondents listed the following sources for education in the industry: industry associations, software vendors, peer networking sites, and news outlets. Respondents listed various sources, including Abrigo, government and regulatory agencies, ACAMS, ACFCS, CFE, various bankers associations, local user groups, and even news sources such as Facebook and Twitter.

Training is a regulatory component and one of the five pillars of compliance. Institutions and compliance professionals know that training should be undertaken and documented annually. This pillar should reflect the importance of training, self-knowledge and study.

Where do you go to learn about fraud trends?

As fraud evolves and illicit actors change fraud behaviors, institutions must encourage and allow compliance professionals to grow and learn through networking, self-study, and funded and approved training. 

View the full results from the 2021 BSA/AML and Fraud Staff Survey by Abrigo: Top Issues for FinCrime Fighters.

One of the many excellent resources mentioned in the survey was local user groups. Many compliance and fraud employees benefit from the networking and education gained within local groups or local chapter groups. Relationships built within these groups help shape learning and growth and can assist with brainstorming during the fraud investigation process. 

Combining programs

BSA/AML and fraud cross-over

Are your BSA/AML and fraud programs separated? One of the heavily debated points among financial institutions is how each one handles its BSA/AML and fraud programs. Currently, most financial institutions are combining the two programs, and it is expected that this trend will continue in 2022. 

Key takeaways: 

  • Of the institutions surveyed, 52.3% keep their fraud and BSA/AML programs separate.  
  • 47% of respondents combine their BSA/AML and fraud programs. 

Rather than debate the topic of BSA/AML and fraud departments crossing over, it is more valuable to understand the reasoning behind this decision. All institutions are different, so there is no precise answer. However, statements such as "BSA and fraud are separate (or together) because it has always been this way" can be a red flag. Institutions should be able to walk through validation processes for this decision and regularly ask, "is what we are doing today working?" As fraud and BSA/AML violations continue to evolve and change, your institution's program should be dynamic and adaptable. For example, if your institution has always focused on monitoring check deposits for fraud, what will happen in your fraud program as the trend changes towards fraud with unconventional payment methods, such as Zelle, Venmo, or cryptocurrency? As fraud methods modernize, those check deposit monitoring solutions might not find much fraud, and institutions will need to identify and prioritize the higher-risk fraud channel.   

 The next step towards solidifying your program's foundation is to evaluate your institution’s monitoring platform. Whether your BSA/AML and fraud departments are separate or combined, the parameter threshold decisions are different for BSA/AML and fraud. Typically, alert generation with BSA/AML threshold settings are changed less frequently than fraud threshold settings, which should be examined more regularly. Managing the solution and tuning it often is essential outside of working fraud alerts to detect and prevent fraud. At a minimum, tuning and efficiency reviews should include:  

  • Optimizing scenarios – adjusting threshold settings and staffing resources 
  • Reviewing previous alerts generated and analyzing losses and fraud SAR filings – alert to case / SAR ratios 
  • Analyzing Reports 
  • Identifying other potential risks 

Let's go back to the previous example. What if your fraud analysts work many check alerts per day, but never identify any fraud or file SARs from cleared checks? This could indicate that you have little risk with check clearings. On the other hand, it could also indicate that the threshold settings are set well below where fraud risks could be identified. Be efficient with your systems' fraud scenarios, alerts, and funnel threshold, and adjust your bank's fraud risk assessment and decision settings based on resources available. Make sure that your institution can process any alerts within 24 hours. If you have fraud alerts waiting to be dispositioned in the system from a week ago, fraud has already occurred, and the bank has incurred a loss. 

If your institution is pondering the strengths and weaknesses in its fraud risk processes, consider a fraud risk assessment. An assessment can provide insights such as: 

  • Identifying potential vulnerabilities 
  • Risk ranking products and services 
  • Identifying areas for improvement 

Pain points

Frustrations with failure to detect fraud

Fortunately, many responses in the survey did not reveal frustrations with not catching fraudulent activity, and many responding institutions were pleased with their successful solutions, but the frustrations that were noted are compiled below. Often, these frustrations can be mediated with careful planning and risk mitigation. Use this list to identify and discuss any similar holes in your institution's policies and procedures.

  • No preventive approach 
  • Lack of communication between fraud and BSA/AML departments 
  • Lack of executive support for an automated system to
  • Lack of fraud prioritization due to no past fraud detection
  • No fraud integration with AML software, or more than one system for fraud and BSA alerts 
  • High volume of false positive alerts 
  • Too many team members involved in investigations 
  • Lack of staff 
  • Fraudsters are getting better at staying below thresholds, increasing manual review needs and lowering thresholds to unreasonable staff expectations 

Fraud wishlist

Attractive additions to a fraud solution

Respondents weighed in on their favorite tools and products used in addition to automated solutions, which included:  

  • Real-time debit card alerts 
  • Core reporting 
  • Digital banking tools 
  • Referrals from frontline staff 
  • Other software provided by information technology and operations departments  
  • Reports and alerts 
  • Policies and procedures, including manual processes 
  • Internal controls 
  • Trends analysis 
  • Branch-level reviews 
  • Chargeback reports 
  • Ability for a customer to report suspicious card activity.   

Many institutions are using automation solutions to avoid human error and streamline their processes. Even more reassuring is that several respondents use tellers and frontline staff training as a resource as well. Fraud has two main components: detection, and prevention. Robust fraud programs not only rely on automated or manual solutions to detect and prevent fraud but layer in staff at the front lines to stop the transaction, adding another component of detection and prevention. Fraud processes should involve multiple lines of defense, and when you can stop the transaction from processing, it's a good sign that your program is strong. 

Here are some high-level takeaways of what financial institutions consider essential to a strong fraud solution: 

  • Over 75% of respondents ranked Real-Time Data as a top 3 desired feature 
  • 46% ranked reportable and trackable SAR processes across fraud and BSA  
  • Artificial intelligence/Machine Learning-Suggested Parameters came in at 41% 

Fraud is often associated with hard dollar loss. Still, prevention takes your program to a deeper level of foundational support that can mitigate risks across the institution and prevent financial and reputational risks. 

Stay in the know.
Cybercriminals, fraudsters, and the dark web – trends to watch in 2022.

Keep me informed Watch Webinar
About the Authors

Melissa Mantooth, CAMS

Risk Management Consultant
Melissa Mantooth is a Risk Management Consultant with Abrigo in the Advisory Services Group. She has over 20 years’ experience working in the financial institution & software industry.  She has worked directly with financial institutions to incorporate automated solutions into their BSA, AML, and Fraud programs. Melissa has worked with

Full Bio

Patrick Thomas, CFE, CAMS

Risk Management Consultant
Patrick Thomas is a Risk Management Consultant with Abrigo in the Advisory Services Group. He has over 20 years of Risk Management and Compliance experience working in both the Mortgage and Banking industries. In his career, he has worked as a Fraud Manager, AML Compliance Officer and Lead Government Mortgage

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

Make Big Things Happen.