Banks tend to neglect financial crimes, study finds

The survey conducted on a sample of 43 C-suite executives and stakeholders from private, public, foreign, cooperative and regional rural banks in India pointed to an increased spending to develop better anti-financial crime framework, with about 54% of the respondents saying that investments over the next two years to prevent fraudulent cases have been planned in their respective organisations.
Areas such as upgrading technology to combat cybercrime (60%), fraud detection and monitoring systems (53%), early warning systems to help detect red flags (53%, artificial intelligence in fraud detection (47%), fraud risk assessment (40%), and customer education/awareness (40%) were given highest priority to build a better Fraud Risk Management (FRM) system.

Fraudulent documentation, cybercrime, overvaluation or nonexistence of collateral and diversion of funds were reported to be the top four types of fraud experienced by the banks according to the respondents. 

Despite most banks investing a sizeable proportion of their resources in fraud risk management systems, the reasons identified for an increase in fraud incidents are: a lack of know-how about the technology, lack of tools to identify the potential red-flags and pressure environment to meet targets.