Banks have underestimated financial crimes: Deloitte

According to the Deloitte India Banking Fraud Survey, about 84% of respondents pointed to a substantial rise in fraud incidents. The survey findings indicate that PNB like frauds will continue to rise with banks continuing to lack a holistic anti-financial crime compliance programme. Survey respondents identified the top four types of frauds experienced by them as – fraudulent documentation, cybercrime, overvaluation/ non-existence of collateral and siphoning/ diversion of funds. “Frauds are on the rise and will continue to rise. Banks appear to be underestimating their ability to prevent frauds and this may impact the nature of anti-fraud compliance programmes being developed,” the survey says. The kind of fraud being highlighted here perhaps indicates the ineffectiveness of existing controls to prevent such occurrences. Considering none of these frauds are new for banks (cybercrime being the exception), it is important to know why they remain prevalent.According to the report, the root cause responsible for increase in fraud incidents appears to not having been adequately addressed. Some of the key reasons identified by the respondents for the increase in fraud incidents include, use of new technology and digital channels that have made fraud detection difficult, lack of tools to identify potential red flags and business pressures to meet targets. Respondents appear to have a strong Fraud Risk Management policy on paper. However, what seems to be missing is the use of technology tools, intelligence gathering, conducting regular fraud risk assessments, fraud awareness training, vendor due diligence and social network analysis, the report said.