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Bank Fraud – Bank Scams

Bank fraud is a crime that has been around as long as banks themselves. Anytime there is a large amount of money floating around, there are going to be people trying to figure out ways to get to it.In the United States, and most other developed countries, bank fraud is a serious problem that causes billions of dollars in damages every year, and is considered a federal offense. In China bank fraud is even punishable by death.Bank fraud is defined as attempting to wrongfully take money or property from a Federally insured financial institution. That doesn’t mean the banks are the only victims though. Millions of people every year fall victim to monetary damages that are caused by bank fraud.

Bank Fraud

There are two main categories when it comes to bank fraud, but there are countless ways that the crime can occur. Types of bank fraud can be categorized to inside and outside bank fraud.

Insider Bank Fraud

Insider bank fraud is perpetrated by someone who works inside, or has access to restricted areas or information inside of the financial institution. Insider bank fraud can be difficult for banks to defend against, since so many people are put in a position of responsibility with the banks money. Some of the more common forms of insider fraud are:

  • Identity Theftt: When a bank employee steals personal information from customers in order to sell the information or to make fraudulent purchases using a stolen identity.
  • Illegal Insider Trading: This occurs when an insider has authority to make investments on behalf of the bank, and engages in high risk trades without the bank being aware of it. A series of illegal trades gone wrong can cause enough damage to put a bank out of business.
  • Fraudulent Loans: Fraudulent loans can occur when a loan officer within a bank forges documents, creates false entities, or lies about the ability of the applicant to repay in order to “borrow” a sum of money from the bank that they never intend to repay.
  • Fraudulent Institutions: This is a form of fraud where an entire bank is fraudulently created. The bank is illegal, and uninsured. The scam revolves around people making uninsured deposits to the bank, only to have the bank, along with their money, eventually disappear.
  • Forged Documents: A forged document claiming that a sum of money has been transferred to another account or something similar can be valuable to a con artist who doesn’t want the bank to notice any missing money.
  • Wire Fraud: It’s common place for banks to wire large sums of money on a daily basis. An insider can fraudulently wire money to a personal account at an offshore bank. It may take a bank months or even longer to notice the missing funds.

Whenever people are put in a position to handle large amounts of money, and the opportunity for fraud presents itself, it is always a serious threat. Banks and financial institutions are constantly updating security to prevent insider fraud. The documented cases of fraud have been on the decline over the last couple of decades. While computer tracking and improved security certainly deter fraudulent practices, the threat still exists, and insider fraud still occurs on a regular basis.

Fraud Perpetrated By Outside Parties

Bank fraud is not limited to those working inside the institutions. Banks, and their customers, have been long time targets for con artists. Here are some of the more common ways that fraud can be accomplished by individuals without insider access to the banks.

  • Check Fraud: There are a variety of ways to commit check fraud. The basic premise is that a check is forged, or deposited and then withdrawn before the check can be returned for non sufficient funds.
  • Credit Card Fraud: Credit card fraud is a very common crime. Credit cards can be stolen or created with a fake identity. Thousands of dollars can be fraudulently spent before the bank or the victim catches on.
  • Fraudulent Accounting: Documents can be forged to inflate the perceived value of a company. This is used to attract large investments from the banks, when in reality the company may be worthless and never intends on giving the bank any return on their investment.
  • Stealing Identities: Identity theft doesn’t only happen due to banking insiders. Personal information may be stolen via fake documents, phishing for information on the internet, through computer systems, or through various other avenues. The information is then used to take out loans or apply for credit cards using the victims personal information.
  • Money Laundering: Money laundering simply refers to hiding the source where a sum of money originates. There are many ways for someone to launder money through a bank. Purchasing and selling securities, using the funds as collateral on the loans, and even writing off the money as business expenses are all common forms of money laundering.

Protecting Yourself From Bank Fraud

While the term “bank fraud” refers to criminals stealing money from financial institutions, that doesn’t mean their aren’t individual victims as well. For most people, the biggest threat is having their identity stolen. Once a thief gets a hold of your personal information, they may take out loans or make credit card purchases in your name. In many cases by the time anyone catches the fraud, the thief has already made off with thousands of dollars. This results in a loss of finances as well as damaged credit that may take years to repair for the victim. The best way to attain optimum ID theft protection is to closely monitor your credit reports and bank statements. If you see anything suspicious, or lose any personal information, report it to your bank at once.

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7 Comments For This Post

  1. Darren Gosling Says:

    Hi,
    I’ve just received an email from a man called Benson Kwame from Ghana. He claims to be the regional manager of the commercial bank of Ghana (I.C.B) Accra bank of Ghana. He has written to me in good faith that it is his duty to send a financial report to his head office at the end of each financial year. Last year the 2007 financial report. He has discovered that there is 3,750,000.00 U.S. of which head office is not aware of and will never be aware of. He has placed it in an escrow account with no beneficiary. He would like me to place the money in my account as he cannot be connected to the money, with me collecting 30% of the total funds as my commission. He has asked me to reply to his email. This is his email address that I was given mr_benson_kwamebk05@hotmail.com
    I will keep my email from Mr Benson in case you would like the original. If by chance I have sent this to the wrong people, i.e. ‘you’, could you please give me an email address I can send this to.
    Thank you,
    Darren

  2. admin Says:

    This is a twist on the classic 419 or advance fee fraud. It’s a scam email, don’t reply.

  3. DOMONIQUE Says:

    OK I HAVE A FAMILY MEMBER WHO HAS BEEN A VICTIM OF ONE OF THESES SCAMS SHE WAS FOOLED VERY WELL BECASUE SHE DID NOT KNOW THAT IT WAS A SCAM SHE WAS EVEN ABLE TO “PROCESS” THREE CHECKS INTO HER BANK BEFORE THE BANK REALIZED THE CHECK WERENT REAL.. AND THESE WERE A DIFFERENT TIMES … WE NEED TO FIND OUT WHAT ARE THE NECCESSARY STEPS TO MAYBE DISPUTE THIS ISSUE BECASUE ITS AT LEAST 6 OR 7,000 DOLLARS AND SHE COULD BE FAACING JAIL TIME IF THE BANK DECIDES TO PRESS CHARGES .. WHAT DO WE DO PLEASE HELP

  4. Vishal Says:

    Hi,

    You should immediately lodge a complain with IC3 (Internet Crime) cell of Feds.

    You should keep all details mails/Couriers (Envelops)/Text Messages/Call Records which happened during this whole situation.

    Get in touch with your local Sleeper Cell for Cyber Crime and take Bank people in confidence.

    Money; I don’t think you can ever be able to retrieve.

    Thanx,

    V

  5. niecey Says:

    i recieved 2 $1000.00 money orders and I thought they were my payment from a settlement i was to receive. But the bank cashed then and i spent the money now they are saying they are fraudulent and I have 10 days to come up with money or they will press charges. What can they do? They wont work out a payment plan with me for the money. I have never been in trouble before and dont want to loose my job over a careless mistake that I didn’t even know was fraudlent.

  6. jon Says:

    anybody know anything about wire transfer scam, by UBA bank of ghana by a Mr.charles odonkor…it’s time his name turns to mud.

  7. gilbert Says:

    I too received a letter from a fraud in my mobile I dont know how he got my phone number.
    Dear Friend,

    Please forgive my manner of a approach which is rather unorthodox sending you an sms rather than calling you over the phone which would have been better but for the confidentiality this transaction requires I chose to send a message. You can however reach me on this number +1 (765) 228-2533 when necessary.

    A citizen of your country, Late Mr. Sarin Gupta who lived and worked in the States as an international businessman deposited in our bank the sum of Five million, Seven hundred and Thirty thousand US Dollars (US$5,730,000.00) and for this reason I am contacting you to help to get back the money left behind by him.

    This is safe, beneficial and will not endanger your position or reputation, else I would not have contacted you as I am presently the Director of Business Services of the bank here in Indiana Midwestern United States of America.

    His account has been dormant for about four years now and all effort to reach him failed. His telephone number cannot be reached, emails sent to him kept bouncing back as undelivered and we never got any response from the letters posted to his residential address. This issue prompted me to carry out an independent investigation about his whereabouts since he did not provide a beneficiary at the time he opened the account with us only to find out to my greatest surprise, that he died in New York in 2009 while on vacation there.

    His death has not been reported to our bank from that time till this moment and nobody in our bank is aware of this except me. I have made several enquiries at your embassy and passport offices and I could not get any information on him to enable me reach any of his relatives and for this reason I want you to apply as his Cousin in order to claim the money from our bank. It does not matter if you were his Cousin or not.

    I am the Director of Business Services of our bank and will sign the final approval of your application. Once approved, the money will be transferred to any account you will provide. Upon the receipt of the money, I will come over to your country to meet with you in order to share the money. The money shall be shared into two parts respectively (60:40) for me and you after deducting all costs incurred in the process of getting it.

    I have all the copies of the necessary documents required to back up this claim and all I want now is your honest cooperation to enable us make this claim within the shortest time possible. Write back to confirm your willingness to do this with me and I shall inform you on what next to do to make sure you receive the money. If nothing is done immediately, the money will be returned to the national treasury by our bank and me and you will gain nothing from it. If on the other hand you are not willing to do this, please inform me so I can immediately look for someone else. Thank you for your kind understanding.

    Yours sincerely,

    Mr. Chris Courtney

    +1 765 228 2533

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