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The Signicat Blog
Fraud management and prevention
Thais Guillen

Marketing Manager UK

Fraud management and prevention: technological innovation as the best ally

Fraud management is one of the main areas of action and prevention in both private companies and public organisations.

This concept implies a strong commitment to prevention and to implementing fraud management solutions that avoid the risk brought by unplanned situations. Fraud risk management limits the fraud risk that may arise from the company's normal activities and operations and reduces its harmful consequences.

Fraud management and prevention activities should be framed within the company’s risk management rulebook. Fraud is one of the main risks faced by companies in the banking and financial industry due to the nature of their operations.

More and more, companies are taking action to prevent this through the digitalisation of the companies’ processes and the implementation of fraud management software and digital solutions.

# What is fraud management?

Fraud management is based on the analysis of the activities of a company, institution, or organisation that are susceptible to fraud, disloyalty, or breach of trust in its financial relationships.

Banks, for example, carry out fraud risk management by implementing a comprehensive anti-fraud system with a structured 360° approach. This allows identifying the potential risk factors of its activities faster and more efficiently, such as bank manager fraud, which makes it possible to identify and prevent them through rapid response.

Revenue assurance and fraud management must be implemented throughout all company’s branches and departments with fraud management solutions that assess the operational, legal, labour, commercial, and financial areas. This will allow a complete understanding of all the fraud risks and complications that may arise in the normal development of the company’s activities.

To achieve effective fraud risk management, organisations develop fraud case management plans.

Fraud case management plans consist of a series of preventive measures to mitigate risks to their lowest level. These measures usually focus on the optimisation and remodelling of the company's normal processes to gain control over all the activities and all the agents involved, both internal and external.

Fraud management purposes:

  • Development of preventive measures through the implementation of fraud management solutions that guarantee maximum security in the company's activities.
  • Supervision of all company processes to minimise the detection time as much as possible.
  • Ensuring fluent and secure internal communication to create a safe channel for detection and reporting.
  • Investigate any fraud or fraud attempt (such as bank manager fraud) from a 360º approach.
  • Follow-up of the implemented plans of action.

# Fraud case management stages:

Anti-fraud risk management organisations warn companies and institutions of the importance of creating a comprehensive fraud management system that successfully prevents, detects, and corrects any fraud attempts before they cause irreversible damage to the company.

These comprehensive fraud management plans usually have 5 main stages:

  1. Implement a fraud risk management policy as part of corporate governance and create a scorecard covering all competencies necessary for fraud detection and prevention.
  2. Conduct a rigorous fraud risk assessment using the information collected from the alerts and controls set out in the fraud management policy.
  3. Implement preventive and detective fraud risk control activities and solutions that enable to take action in the shortest time possible to minimise possible damage.
  4. Develop an effective and secure fraud reporting process to enable an effective investigation and the implementation of corrective actions.
  5. Monitor the fraud case management process to control its results and improve its performance.

# How is bank manager fraud investigated? Fraud case management in banks

On average, it takes 18 months for banks to detect fraud.

This means months of damage and loss, in many cases irreparable, which the bank must manage in the best possible way in an attempt to mitigate the financial and reputational impact it can cause the company.

Therefore, it is of vital importance for banks and all financial companies to integrate AML practices and controls in all their processes. Only by doing so, immediate detection of any fraud attempt will be possible. This fraud case management practice becomes key to avoiding any damage resulting from the fraud attempt by carrying out a thorough investigation from the very first moment.

AML (Anti-Money Laundering) is a set of fraud management and prevention practises that financial companies are required to follow.

It is the basic framework of rules to fight fraud, disloyalty, or any breach of trust in financial relationships in the banking, financial and related sectors.

In consequence, establishing AML controls in these sectors, for instance in customer acquisition processes (Know Your Customer Process), ensures a trustworthy and secure identity verification process of new customers.

There are different fraud management solutions and methodologies to prevent risks, which serve several different objectives, and all are based on taking all the company’s and user’s processes and activities to a controlled digital environment.

Only process digitalisation can prevent a potential offender from using our services for money laundering, while at the same time optimising the registration process, by simply integrating a single AML-compliant digital identification solution.

AML5 (or 5AMLD) compliant solutions will give us full control over fraud risk management and prevention and will mitigate the potential risks companies take when digitally onboarding customers and users.

# Fraud management solutions for revenue assurance and fraud management in financial companies

Fintech solutions are not only useful in the financial sector but are also revolutionising fraud management and risk prevention in all industries.

They enable real-time investigation of any money transactions across accounts, its users’ activities, products, processes, and channels, and are capable of automatically detecting and preventing internal and external fraud in an organisation.

They represent a substantial advance in regulatory compliance and anti-spoofing controls while optimising processes and substantially improving the quality of user experience.

VideoID has wrought a triple revolution: it has completely transformed remote customer onboarding methods giving them a full guarantee of security, it is the first fraud management software that complies with the most demanding legislation (eIDAS and AML) in the most sensitive sectors, and it helps cut costs, time and bureaucracy to zero. This fraud management solution allows to completely digitise the most tedious processes thanks to a frictionless end-to-end system.