Bank fraud is an illegal activity that has a negative impact on both financial institutions and the individuals and businesses that do business with those institutions. Fraud of this type can take on many forms, with some schemes initiated by people working within banks and others originating with others outside the structures of the institutions to conduct unauthorized transactions. Fortunately, it is possible to identify and report bank fraud, possibly leading to the arrest and conviction of the individual or entity that is guilty of the fraudulent activity.
Bank customers often report bank fraud directly to their banks, a move that usually leads to an internal investigation that eventually expands to include law enforcement agencies and possibly national trade agencies. The reporting is usually triggered by recognition of some sort of unusual activity involving a customer’s bank accounts, often a savings or checking account. Once reported, the bank will normally take steps to protect both the interests of the customer and the bank itself, which in turn launches the investigation.
If it is determined that the unauthorized activity involving the bank account is not due to some type of clerical error, the institution is likely to report bank fraud to a local police department and other law enforcement agencies that may be needed to track and eventually locate the individuals responsible for the fraudulent activity. Trade organizations, such as the Federal Trade Commission (FTC) in the United States, may also be notified and involved in the ongoing investigation, depending on the nature of the fraudulent transactions. For example, if the activity involves illegally removing shares from an investment account, the FTC or one of its counterparts in other nations may cooperate with law enforcement to track the origin of the transaction and hopefully identify the originator.
At times, bank employees may notice something unusual with a bank account before the customer is aware of an issue. Often, the suspicious activity is placed into some sort of holding pattern while the bank attempts to contact the customer for verification that the transaction is legitimate. Should the customer indicate that the transaction was not initiated or approved, the bank will then take steps to report bank fraud to the appropriate authorities, as well as stop the processing of the transaction.
Whether the fraud is first noticed by an individual or an employee of the bank, it is important to report bank fraud as soon as possible. Allowing more time to pass makes it increasingly difficult for law enforcement to trace the origin of the transaction and identify who initiated the attempt. For this reason, a quick response has a much better chance of isolating the origin of the fraud and possibly preventing other individuals and banks from becoming victims.