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How Bank Criminals Get Away With Their Crime

When you talk about crime in the financial sector, it is difficult to leave out bank employees from the equation. We must come in tandem with this fact before talking of ways in which they escape with their heist. According to Doug Johnson, senior vice president at the American Bankers Association, “Bank employees work around and have easy access to a lot of money. Insider threats can result when they experience financial difficulties.” So, temptation is what they battle with each day of their lives. Once there is a financial difficulty, they wouldn’t stare at the huge wads at their disposal without planning of how to do away with some. Furthermore, many of them are filled with greed and want to satisfy their extravagant lifestyles.

Let me share a short case study: “In Lynchburg, Va., the manager of a credit union embezzled funds from and defrauded her institution over 14 years. She and the head teller took out loans in members’ names, transferred money and wrote checks on members’ accounts, covering up their actions by changing bank statements or just not sending them out. All told, the two caused $12 million in losses, according to authorities, and are now serving time in prison.”

Of course, those in question were later caught after some 14 good years. In some other cases, the culprits do away with the crime. Weaknesses or breakdowns in the system can give bank tellers access to personally identifiable information — dates of birth, account numbers, driver’s license numbers and Social Security numbers.

“What we’ve seen is they tend to sell that information to rings involved in obtaining fake, personally identifiable information documents, like driver’s licenses with a conspirator’s photo,” says Thomas Reitz, a senior FBI agent with the Complex Fraud Squad in Orange County, California. The rings use these details to create the fraudulent documents needed to impersonate customers and withdraw money directly, with fake IDs or through fraudulently obtained debit cards (Lambarena, 2016). So, it will be difficult to trace them in this situation. The banks would be tempted to go after the external suspects when in real fact, there are green snakes under the green grass.

For instance, in 2015, a New Rochelle, N.Y., man pleaded guilty to conspiracy and bank fraud that resulted in $481,856 in losses. The scheme recruited bank employees and other individuals, allegedly homeless people and drug addicts, who posed as account holders with forged New York driver’s licenses and withdrawal slips (Lambarena, 2016). So, such mules will still remain within the system until their identities are revealed.

Here’s another case study: “One teller, after attending an all-day training session on how the on-line teller and customer relationship management systems provided the ability to see all customers and all account information from anywhere in the bank underpaid a customer by $600 and put that $600 in an account in her name at a different branch” (Hale, 2016). If not for the alertness of the audit and systems department of the bank, she would have got away with the money.

Where many bank criminals do have a field day is identity theft and sales of customer information to outsiders. It is usually difficult for the banks to detect this scam. They wouldn’t know that customers’ information have been let out by a compromised employee, maybe until after some decades. A teller would have to put in a few years to scheme over how to avoid detection and build trust of fellow employees. An inexperienced person that knows little is caught right away for lack of brains. To some extent the bank does rely on the customer to review their statements and complain/inquire of discrepancies that will be investigated (Mirwani, 2016).

The most notorious of all internal scams was perpetrated by the employees of Wells Fargo. The bank had to be fined $185million for fake accounts and they sent 5,300 workers packing. How were they able to get away with this? The employees implicated in this scam took advantage of vulnerabilities in the computer systems at Wells Fargo to set up accounts without the customers being able to be aware of these accounts. For instance, through a technique described as “pinning,” the employees were able to set a PIN to the customer’s ATM card in order to impersonate the customer on the Wells Fargo computer system and use that PIN to enroll customers in online banking or online bill paying without them being aware. The rogue employees would use phony email addresses in setting up these accounts so the customer never became aware that this was going on (Powell, 2016).

Having known ways in which bank employees can serve as bad omen to the banking system, let’s discuss ways that customers can protect themselves from internal bank fraud.

Constant monitoring of account activities: The best thing that any consumer can do is to regularly monitor all of their accounts carefully for indications of unauthorized fees, says Steve Weisman, a professor at Bentley University author of the Scamicide blog. “Ultimately, the fees lost to this particular scam came out of legitimate accounts of the victimized customers and would have been apparent upon a careful examination of their monthly statements. However, too many people do not review their account statements with the precision required to identify scams such as this” Powell quoted him.

This same stance was maintained by Amy Nofziger, a spokesperson from AARP’s Fraud Watch Network. He said that: “In these days of increased electronic correspondence when many institutions have cut down on paper statements as much as they can, it’s important that consumers are vigilant in checking their financial statements from their banks, retirement accounts and any other place where a financial transaction can take place. If you don’t check regularly on your own, whether it’s an incorrect fee or someone going after your money, you could put yourself more at risk.” There is nobody that can actively and efficiently play the role of monitoring of your account like yourself (Powell, 2016).

Request your bank to do a social security/ name check: Geoffrey VanderPal, a certified financial planner with VanderPal Capital Management, suggests that you periodically ask the financial firms with which you do business to do a Social Security and name check to see what accounts may be opened or closed based upon your identifying information. According to him, any bank or financial firm can do name and Social Security number searches on their systems (Powell, 2016).

References

Hale, M (2016). What Prevents A Bank Teller From Stealing Money From Your Account? Retrieved from https://www.quora.com/What-prevents-a-bank-teller-from-stealing-money-from-your-account-or-committing-identity-fraud-with-your-info

Lambarena, M (2016). How Bank Employees Can Pose A Risk To Your Money. Retrieved from https://www.marketwatch.com/story/how-bank-employees-can-pose-a-risk-to-your-money-2016-09-21

Powell, R (2016). How to Protect Yourself from Fraud by Your own Bank. Retrieved from https://www.usatoday.com/story/money/columnist/powell/2016/09/09/how-protect-yourself-fraud-your-own-bank-wells-fargo/90124658/

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