6 Ways to Do Fraud Prevention in the Banking Industry

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Fraud prevention has become a major concern in the banking world. ! Losing money due to fraud can have a disastrous impact not only on the company but also on the customer. Therefore, banking companies need to adopt effective measures to prevent it.

Through this article, you will learn in-depth how to prevent fraud that often occurs in the banking world. Let’s read more below!

What is Fraud?

Fraud is an intentional act of crime to give the perpetrator an illegitimate advantage or deny the victim’s rights. In the banking industry, fraud can involve various activities such as the falsification of documents, fraud, or embezzlement of funds. This crime can be committed by one individual, several individuals, or even a company.

The impact of financial fraud is very detrimental to banking companies and their customers. Fraud can cause significant financial loss, damage a company’s reputation, and threaten public confidence in the banking sector. In addition, customers can also experience individual losses, such as loss of funds or misused personal information.

Therefore, detection and fraud prevention is very important in the banking industry. Banking companies need to adopt strong and effective measures to prevent their occurrence such as strengthening internal controls, increasing supervision, and providing anti-fraud training to employees. In addition, cooperation with the authorities, such as the OJK, is also important in dealing with and overcoming fraud in the banking sector.

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How to Detect Fraud

Fraud prevention is an important measure in maintaining security and trust in the banking industry. To identify fraudulent acts, companies need to adopt effective and relevant strategies and methods. The following are several ways that can be used to detect fraud.

1. Data Analysis and Transaction Patterns

Performing data analysis and checking transaction patterns is an important way to detect fraud. By using advanced technology and software, companies can analyze transaction data, customer behavior, and suspicious financial patterns. The existence of unusual transaction patterns such as unusually large withdrawals of funds and a series of unusual financial transactions can be an indication of fraud.

2. Monitoring of Uncommon Activities

Monitoring activities that are unusual or not following the usual transaction patterns made by customers can help detect fraud. For example, if suspicious transaction activity occurs on a customer’s account that was previously rarely used or has a stable usage pattern, this could be a sign of fraud. Additionally, monitoring suspicious login activity such as repeated login attempts or from an unusual location can also provide clues to fraud attempts.

3. Implementation of Early Detection System

Using an early detection system is a proactive step in detecting fraud. This system can monitor and detect suspicious or unusual behavior in real-time. An example is the use of artificial intelligence and machine learning technologies that can assist in identifying complex and evolving patterns of fraud. This early detection system can provide a warning to the security team or company management when there are indications of fraudulent activity.

4. Reporting and Whistleblowing

Developing reporting channels and encouraging whistleblowing are important steps in detecting fraud. Banking companies must provide a safe and secure mechanism for reporting fraud. This includes policies on anonymity and protection as well as legal protection for whistleblowers. With the existence of an effective reporting channel, employees or parties who know or suspect that an act of fraud is occurring can provide valuable information to detect and investigate this fraud.

5. Pemeriksaan Internal dan Eksternal

Conducting regular internal and external inspections is an important step in fraud prevention. This inspection is carried out by the company’s internal audit team or by an independent auditor working with the company. This examination will involve reviewing and evaluating the company’s policies, procedures, internal control systems, and financial transactions. Findings or indications of fraud will be immediately disclosed and appropriate handling measures can be taken.

Baca juga: Mengenal Apa Itu KYC, Cara Kerja dan Manfaatnya bagi Industri Keuangan

How to Prevent Fraud in Companies

The following are several ways that can be done for fraud prevention in companies, especially those engaged in the banking industry.

1. Tightening the Implementation of SOP

Clear and strict SOP (standard operating procedures) are the first step in fraud prevention. Every company must have a standardized SOP for every process involving the core business, especially those related to finance. This will help prevent loopholes that can be exploited by fraud perpetrators.

2. Offering Internal Control System

Strong internal controls are very important in fraud prevention. The company must have an adequate internal control system to control and monitor financial transactions. This includes strict supervisory policies, regular inspections, and a clear segregation of duties to reduce the risk of fraud.

3. Supervising and Communicating the Accounting Process Properly

Effective oversight and good accounting communication are important elements in fraud prevention. Banking companies must have a team responsible for monitoring and supervising financial activities. In addition, a good communication process between the finance department and other departments can help identify potential fraud more efficiently.

4. Providing Reporting Channels

Banking companies need to provide special communication channels that allow employees to report fraud anonymously. This will protect employees who wish to report violations as well as assist the company in preventing and dealing with fraud quickly.

Baca juga: 2 Contoh KYC dalam Industri Perbankan dan Keuangan

5. Giving Anti-Fraud Training to Employees

Regular anti-fraud training for employees is an important step in preventing fraud. In this training, employees must be given an understanding of the signs of fraud, reporting procedures, and the legal consequences of fraud. With a better understanding, employees will be more aware of potential fraud and can take appropriate preventive measures.

6. Conducting an Audit Involving an Independent Auditor

Audits conducted by independent auditors help ensure the integrity and reliability of a company’s financial statements. Independent auditors will examine and evaluate the company’s compliance with established procedures and policies. Involving independent auditors in the audit process for fraud prevention will help identify gaps and potential fraud and provide recommendations for improvement.

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