This introductory guidebook for fraud and AML compliance professionals provides an in-depth review of the most common fraud methods and scams that bank and credit union customers face, plus:
Fraud Guidebook: Practical insights for financial institutions
Modern fraud typologies and prevention methods
An in-depth review of top fraud trends and how financial institutions can prepare to combat crime.
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- Check, wire, cryptocurrency, and AI-driven fraud typologies.
- FinCEN guidance and checklists for educating customers on avoiding scams.
- Best practices for budgeting and making a case for automated fraud detection technology.
- Advantages to combining fraud and AML departments for a united front against financial crime.
In this guide:
Fraud programs need cutting-edge technology and consistent processes to excel in proactive, dynamic prevention and detection.
This fraud guidebook covers:
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Evaluating the costs of fraud
Leaders within financial institutions are frequently tasked with grasping the full scope of a bank's fraud losses and their impact. Recognizing that the repercussions extend far beyond the immediate monetary losses from each fraudulent transaction is essential.
An exploration of modern fraud typologies
Fraudsters are continuously adapting their methods, creating new and increasingly sophisticated typologies. As professionals in fraud prevention, staying ahead of these threats requires more than just awareness—it demands deep expertise and an understanding of the latest trends shaping criminal behavior. This section will explore the most pressing fraud typologies including check, wire, and P2P fraud, equipping you with the knowledge and strategies necessary to safeguard your organization and mitigate emerging risks.
Cryptocurrency and AI-driven fraud
Cryptocurrency is fast becoming a favorite for scammers, not just in the murky realms of the dark web but in everyday transactions. Fraud involving cryptocurrency represents more than half of the reported fraud losses in 2023 at $5.6 billion. Why is cryptocurrency fraud skyrocketing? It boils down to opportunity. In another concerning trend, AI-enabled fraud losses in the U.S. are projected to soar to $40 billion by 2027, a significant jump from $12.3 billion in 2023. This sharp increase signals an urgent need for financial institutions to strengthen their fraud detection measures and stay ahead of these sophisticated threats. While AI will undoubtedly increase fraud attempts, AI and ML are part of the solution to mitigating risk through better detection.
Combining AML/CFT and fraud programs
As financial crimes grow more complex, community financial institutions are rethinking how they approach risk management. A leading strategy gaining traction is FRAML—the integration of fraud detection and anti-money laundering (AML) programs. By merging these traditionally separate functions under one strategy, financial
institutions are improving their ability to detect suspicious activity, respond to evolving threats, and align with
regulatory expectations.
Budgeting for new fraud technology and mitigating risk
Many of the fraud typlogies discussed in this guidebook are best combatted with the help of new and improving fraud detection software. Introducing new banking products in the financial services industry is an exciting venture and what gives financial institutions a competitive advantage. However, with all innovation comes great responsibility, especially when it comes to safeguarding those new products against fraud. Financial crime professionals should insist on a seat at the table when new banking products are first introduced.
