Bank Fraud Case Study

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2.3. TYPES OF BANK FRAUD I) Fraud by Insiders (INTERNAL FRAUD) Internal fraud, is broadly defined as an employees’s of banks misuse or misappropriation of bank resources or assets of bank for personal gain. The Basel II defines internal fraud is “Losses due to acts of a type intended to defraud, misappropriate property or circumvent regulations, the law or company policy, excluding diversity/ discrimination events, which involves at least one internal party.” According to the various study banking sector is the second largest sector where the internal frauds are happening. These are some types of interanal banking fraud: i) Rogue traders A rogue dealer is a tremendously positioned insider nominally approved to invest huge funds on behalf of…show more content…
A bank executive had duped people into depositing Rs. 400 Cr. in account set up by him under the imperssion that they were investing in some scheme offered by the bank. The case is still under trail. ii) Fraudulent loans One approach to get rid of money from a bank is to take out a loan, a tradition bankers would be willing to inspire if they recognize that the cash will likely be repaid in full with premium. A fraudulent loan, nevertheless, is one in which the borrower is a trade entity managed by means of a dishonest bank officer or an partner; the "borrower" then opt for non- payment or vanishes and the money is long gone. The borrower may even be a non-existent entity and the loan merely an artifice to hide a theft of a significant amount of money from the bank. iii) Wire…show more content…
As these networks are utilized by banks to settle money owed with each other, rapid or in a single day wire exchange of enormous quantities of money are normal; at the same time banks have put exams and balances in situation, there is the chance that insiders may attempt to make use of fraudulent or cast documents which declare to request a bank depositor's cash be wired to yet another bank, most of the time an offshore account in some distant foreign country. iv) Forged or fraudulent documents Forged records are in most cases used to conceal different thefts; banks tend to count their cash meticulously so each penny need to be accounted for. A document claiming that a sum of money has been borrowed as a loan, withdrawn by an man or woman depositor or transferred or invested can consequently be valuable to a thief who wishes to conceal the minor detail that the bank's cash has actually been stolen and is now long gone. v) Uninsured

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