Blog: Fraud Prevention

Internal fraud is the least frequent category of bank fraud and the most expensive per event. It runs longer before discovery than any external scheme — often years — because the person committing it understands the controls, has legitimate access, and is trusted.

It is also the category institutions are least willing to discuss honestly, which is precisely why the controls that address it get relaxed.

The Common Schemes

Cash theft. Teller drawer

ACH fraud is easy to underestimate because individual events are usually small. The exposure is structural rather than dramatic: enormous volume, thin margins on each transaction, return windows measured in days for businesses, and a warranty framework that puts the originating institution on the hook for entries its customer transmitted.

The Two Directions

ACH moves value two ways, and fraud on each behaves differently.

Debit fraud — someone pulls

Check volume has fallen for two decades and check fraud losses have not. The explanation is straightforward: the checks still in circulation are disproportionately high-value business and government payments, and mail theft has created a reliable supply of stolen items for anyone willing to alter them.

This guide covers the three fraud types, how each one presents, and where the loss lands.

The Three Types

Counterfeit

The check was never issued by the

Red flag lists are easy to publish and hard to use. Most of them name an indicator, offer no context, and leave the reader unable to tell the difference between a genuinely suspicious pattern and a customer having an unusual week.

This list is organized differently. For each flag: what it actually looks like, why launderers do it, and what a banker should do. Nothing here is a rule — every one of these has innocent explanations, and the skill is in the follow-up, not the ...