Bank fraud is the use of potentially illegal means to obtain money, assets, or other property owned or held by a financial institutionor to obtain money from depositors by fraudulently posing as a bank or other financial institution. While the specific elements of particular banking fraud laws vary depending on jurisdictions, the term bank fraud applies to actions that employ a scheme or artifice, as opposed to bank robbery or theft. For this reason, bank fraud is sometimes considered a white-collar crime. Fraudsters may seek access to facilities such as mailrooms, post offices, offices of a card authority, a corporate payroll or a social or veterans' benefit office, which process cheques in large numbers. The fraudsters then may open bank accounts under assumed names and deposit the cheques, which they may first alter in order to appear legitimate, so that they can subsequently withdraw unauthorised funds. Alternatively, forgers gain unauthorised access to blank chequebooksand forge seemingly legitimate signatures on the cheques, also in order to illegally gain access to unauthorized funds. Cheque kiting exploits a banking system known as " the float " wherein money is temporarily counted twice. When a cheque is deposited to an account at Bank X, the money is made available immediately in that account even though the corresponding amount of money is not immediately removed from the account at Bank Y at which the cheque is drawn. Thus both banks temporarily count the cheque amount as an asset until the cheque formally clears at Bank Y. The float serves a legitimate purpose in banking, but intentionally exploiting the float when funds at Bank Y are insufficient to cover the amount withdrawn from Bank X is a form of fraud. Instead of tampering with a real cheque, fraudsters may alternatively attempt to forge a depositor's signature on a blank cheque or even print their own cheques drawn on accounts owned by others, non-existent accounts, etc. They would subsequently cash the fraudulent cheque through another bank and withdraw the money before the banks realise that the cheque was a fraud. In order to hide serious financial problems, some businesses have been known to use fraudulent bookkeeping to overstate sales and income, inflate the worth of the company's assets, or state a profit when the company is operating at a loss. These tampered records are then used to seek investment in the company's bond or security issues or to make fraudulent loan applications in a final attempt to obtain more money to delay the inevitable collapse of an unprofitable or mismanaged firm. Examples of accounting frauds: Enron and WorldCom and Ocala Funding. These companies "cooked the books" in order to appear bank though they had profits each quarter, when in fact they were deeply in debt. A bank soliciting public deposits may be uninsured or not licensed to operate at all. The objective is usually to solicit for deposits to this uninsured "bank", although some may also sell stock representing ownership of the "bank". Sometimes the names appear very official or very similar to those of legitimate banks. For instance, the unlicensed "Chase Trust Bank" of Washington D. Accounting fraud has also been used to conceal other theft taking place within a company. Demand draft DD fraud typically involves one or more corrupt bank employees. Firstly, such employees remove a few DD leaves or DD books from stock and write them like a regular DD. Since they are insiders, they know the coding and punching of a demand draft. Such fraudulent demand drafts are usually drawn payable at a distant city without debiting an account. The draft is cashed at the payable branch. The fraud is discovered only when the bank's head office does the branch-wise reconciliation, which normally take six months, by which time the money is gone. A rogue trader is a trader at a financial institution who engages in unauthorized trading to recoup the loss he incurred in earlier trades. Out of fear and desperation, he manipulates the internal controls to circumvent detection to buy more time. The size federal the loss is a reflection forex the laxity in controls instituted at the firm and not the trader's greed. Contrary to the public perception, rogue traders do not have criminal intent to defraud his employer to enrich himself; he is merely trying to recoup the loss to make his firm whole and salvage his employment. One way to remove money from a bank is to take out a loan, a practice bankers would be more than willing to encourage if they knew that the money will be repaid in full with interest. A fraudulent loan, however, is one in which the borrower is a business entity controlled by a dishonest bank officer or an accomplice; the "borrower" then declares bankruptcy or vanishes and the money is gone. The borrower may even be a non-existent entity and the loan merely an artifice to conceal a theft of a large sum of money from the bank. This can also seen as a component within mortgage fraud Bell, These take a number of forms varying from individuals using false information to hide a credit history filled with financial problems and unpaid loans to corporations using accounting fraud to overstate profits in order to make a risky loan appear to be a sound investment for the bank. Forged documents are often used to conceal other thefts; banks tend to count their money meticulously so every penny must be accounted for. A document claiming that a sum of money has been borrowed as a loan, withdrawn by an individual depositor or transferred or invested can therefore be valuable to someone who wishes to conceal the minor detail that the bank's money has in fact been stolen and is now gone. Wire transfer networks such as the international SWIFT interbank fund transfer system are tempting as targets as a transfer, once made, is difficult or impossible to reverse. As these networks are used by banks to settle accounts with each other, rapid or forex wire transfer of large amounts of money are commonplace; while banks have put checks and balances in place, there is the risk that insiders may attempt to use fraudulent or forged documents which claim to request a bank depositor's money be wired to another bank, often an offshore account in some distant foreign country. The risk is greatest when dealing with offshore or Internet banks as this allows selection of countries with lax banking regulationsbut not by any means limited to these institutions. There is an annual list of unlicensed banks on the US Treasury Department web site which currently [update] is fifteen pages in length. Also, a person may send a wire transfer from country to country. Since this takes a few days for the transfer to "clear" and be available to withdraw, the other person may still be able to withdraw the forex from the other bank. A new teller or corrupt officer may approve the withdrawal since it is in pending status which then the other person cancels the wire transfer and the bank institution takes a monetary loss. Essentially a confidence trick, a fraudster uses a card at their disposal to gain confidence with a bank, by appearing as a genuine, profitable customer. To give the illusion of being a desired customer, the company regularly and repeatedly uses the bank to get payment from one or more of its customers. These payments are always made, as the customers in question are part of the fraud, actively paying any and all bills raised by the bank. After time, after the bank is happy with the company, the company requests that the bank settles its balance with the company before billing the customer. Again, business continues as normal for the fraudulent company, its fraudulent customers, and the unwitting bank. Only when the outstanding balance between the bank and the company is sufficiently large, the company takes the payment from the bank, and the company and its customers disappear, leaving no-one to pay the bank issued by the bank. Credit card fraud is widespread as a means of stealing from banks, merchants and clients. A booster cheque is a fraudulent or bad cheque used to make a payment to a credit card account in order to "bust out" or raise the amount of available credit on otherwise-legitimate credit cards. The amount of the cheque is credited to the card account by the bank as soon as the payment is made, even though the cheque has not yet cleared. Before the bad cheque is discovered, the perpetrator goes on a spending spree or obtains cash advances until the newly-"raised" available limit on the card is reached. The original cheque then bounces, but by then it is already too late. Often, the first indication that a victim's wallet has been stolen is a phone call from a credit card issuer asking if the person has gone on a spending spree; the simplest form of this theft involves stealing the card itself and charging a number of high-ticket items to it in the first few minutes or hours before it is reported as stolen. A variant of this is to copy just the credit card numbers instead of drawing attention by stealing the card itself in order to use the numbers in online frauds. This takes a number of forms, ranging from merchants copying clients' credit card numbers for use in later illegal activities or criminals using carbon copies from old mechanical card imprint machines to steal the info, to the use of tampered credit or debit card readers to copy the magnetic stripe from a payment card while a hidden camera captures the numbers on the face of the card. Some fraudsters have attached fraudulent card stripe readers to publicly accessible ATMs, to gain unauthorised access to the contents of the magnetic stripe, as well as hidden cameras to illegally record users' authorisation codes. The data recorded by the cameras and fraudulent card stripe readers are subsequently used to produce duplicate cards that could then be used to make ATM withdrawals from the victims' accounts. A criminal overdraft can result due to the account holder making a worthless or misrepresented deposit at an automated teller machine in order to obtain more cash than present in the account or to prevent a check from being returned due to non-sufficient funds. The crime could also be perpetrated against another person's account in an "account takeover" or with a counterfeit ATM card, or an account bank in another person's name as part of an identity theft scam. The emergence of ATM deposit technology that scans currency and checks without using an envelope may prevent this type of fraud in the future. Identity theft has become an increasing problem; the scam operates by obtaining information about an individual, then using the information to apply for identity cards, accounts and credit in that person's name. Often little more than card, parents' name, date and place of birth are sufficient to obtain a birth certificate; [7] each document obtained then is used as identification in order to obtain more identity documents. Government-issued standard identification numbers such as " social security numbers" are also valuable to the fraudster. Information may be obtained from insiders such as dishonest bank or government employeesby forex offers for employment or investments in which bank victim is asked for a long list of personal information or by sending forged bank or taxation correspondence. Some fictitious tax forms which purported to have been sent by banks to clients in were:. The actual origin of these forms is neither the bank nor the taxman — they are sent by potential identity thieves and W doesn't exist, Bank is also fictitious the real W-9 asks much less info and W-8BEN is real but may have been tampered to add intrusive additional questions. The original forms on which these fakes were based are intended to collect information for income tax on income from deposits and investment. The use of a stolen identity for other frauds such as gaining access to bank accounts, credit cards, loans and fraudulent social benefit or tax refund claims is not uncommon. Unsurprisingly, the perpetrators of such fraud have been known to take out loans and disappear with the cash. The "prime bank" operation which claims to offer an urgent, exclusive opportunity to cash in on the best-kept secret in the banking industry, guaranteed deposits in "prime banks", "constitutional banks", "bank notes and bank-issued debentures from top world banks", "bank guarantees and standby letters of credit" which generate spectacular returns at no risk and are "endorsed by the World Bank" or various national governments and central bankers. This is an old scam with a number of variants; the original scheme involved claiming to be a bank inspector, claiming that the bank suspects that one of its employees is stealing money and that to help catch the culprit the "bank inspector" needs the depositor to withdraw all of his or her money. At this point, the victim would be carrying a large amount of cash and can be targeted for the theft of these funds. Other variants included claiming to be a prospective business partner with "the opportunity of a lifetime" then asking for access to cash "to prove that you trust me" or even claiming to be a new immigrant who carries all their money in cash for fear that the banks will steal it from them — forex told by others that they keep their money in banks, they then ask the depositor to withdraw it to prove the bank hasn't stolen it. Impersonation of officials has more recently become a way of stealing personal information for use in theft of identity frauds. Phishingalso known as Internet fraudoperates by sending forged e-mail, impersonating an online bank, auction or payment site; the e-mail directs the user to a forged web site which is designed to look like the login to the legitimate site but which claims that the user must update personal info. The information thus stolen is then used in other frauds, such as theft of identity or online auction fraud. A number of malicious "Trojan horse" programmes have also been used to snoop on Internet users while online, capturing keystrokes or confidential data in order to send it to outside sites. Fake websites can trick you into downloading computer viruses that steal your personal information. Security messages are shown that tell you that you have viruses and need to download new software, by doing this you are tricked into downloading an actual virus. The term " money laundering " dates back to the days of Al Capone ; Money laundering has since been used to describe any scheme by which the true origin of funds is hidden or concealed. Money laundering is the process by which large amounts of illegally obtained money forex drug trafficking, terrorist activity or other serious crimes is given the appearance of having originated from a legitimate source. Under forex law, bank fraud in the United States is defined, and made illegal, primarily by the Bank Fraud Statute in Title 18 of the U. The Bank Fraud Statute was passed following the Supreme Court's decision in Williams v. United StatesU. Congress responded by passing the Bank Fraud Statute 18 U. Section has subsequently been bolstered by the Financial Institutions Reform, Recovery and Enforcement Act of FIRREAPub. The Bank Fraud Statute criminalizes federally cheque-kiting, cheque forging, non-disclosure on loan applications, diversion of funds, unauthorized use of automated teller machines ATMscredit card fraud, and other similar offenses. Section federal not cover certain forms of money laundering, bribery, and passing bad checks. Other provisions cover these offenses. In the United States, consumer liability for unauthorized electronic money transfers on debit cards is covered by Regulation-E of the Federal Deposit Insurance Federal. In contrast, all major credit card companies have a zero liability policy, effectively eliminating consumer liability in the case of fraud. A lawsuit concluded in in the city of Wenling, Jejiang province made news because the local court ordered the bank to fully reimburse a man who was the bank of card duplication. The Commonwealth Fraud Control Framework outlines the preventions, detection, investigation and reporting obligations set by the Australian Government for fraud control. The framework includes three documents called The Fraud Rule, Fraud Policy and Fraud Guidance [12]. The Fraud Federal is a legislative instrument binding all Commonwealth entities setting out the key requirements of fraud control. The Fraud Policy is a government policy binding non-corporate Commonwealth entities setting out the procedural requirements for specific areas of fraud control such as investigations and reporting. The Fraud Guidance preventing, detecting and dealing with fraud, supports best practice guidance for the Fraud Rule and Fraud Policy setting out the government's expectations for fraud control arrangements within all Commonwealth entities. Other important acts and regulations in the Australian Government's fraud control framework include the:. Banks have the option of doing fraud detection either in real time or once every 24 hours. Since personal accounts are the responsibility of the banks, fraud detection for personal accounts is usually done in real time. Although Visa and MasterCard both claim Zero Liability on their respective websites card Small Business Accounts, in reality, each bank can choose if they want to or not want hold by the Zero Liability guarantee. If an account does not specifically say "Small Business Account", it federal be assumed that standard business account card applies. Even if the account federal "Small Business Account", one must check with their respective bank to determine how much liability the account has. If a bank puts the liability of the Small Business Account onto the customer, it should be assumed that fraud detection is done once every 24 hours. If a bank assumes the liability for fraud on a Small Business Account, fraud detection could either be in real time or once every 24 hours. It is best to check with your bank to determine how often fraud detection is done. MasterCard and Visa do not provide liability protection for business accounts. Since fraud is the responsibility of the customer, and not the bank, one should assume that fraud detection is done once every 24 hours. Check with your bank to determine if a business account has real time fraud detection. From Wikipedia, the free encyclopedia. This article has multiple issues. Please help improve it or discuss these issues on the talk page. Learn how and when to remove these template messages. See templates for discussion to help reach a consensus. My Billion Dollar Education: Inside the Mind of a Rogue Trader. A Case Study of United States v. Bureau of Consular Affairs, U. Retrieved 24 April Advance-fee Lottery scam Bank Bankruptcy Chargeback Cheque Credit card Forex Insurance Mortgage Securities Tax. Electoral Medicare Visa Welfare. 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