Fraud Prevention Strategies for Banking Tellers

Abstract

        Currently, there are various kinds of fraud against banks, causing a huge amount of damage to banks.     The frauds were found to be external frauds, for example, counterfeit ATM cards and credit cards for withdrawing money via ATM and swiping credit cards     for payment of products and services. The frauds also included frauds on e-commerce via online channels. Most banks are well protected under their employed systems. Although frauds can be posted on media as breaking news, the banks were able to control such situations and deal with such frauds in a short period of time. However, internal problems which are considered as the silent danger against banks, especially frauds caused by "tellers" who are responsible for money depositing and withdrawal have been unresolved. They could make any fraud at any time without any clue to predict their frauds in advance. This became a vulnerability with no sufficient prevention by the banks. These frauds caused damage to the assets, reputation, and confidence of outsiders, especially customers of banks. Previously, there were only a few numbers of research on the causes and behavior of tellers in the banking business who committed fraud against their duties. Therefore, the researchers found an opportunity to conduct research on this issue. This article is a part of the thesis written by the researcher who was studying in Master of Business Administration Program in Management and Strategy, Mahidol University. Qualitative research through the in-depth interview with 19 people with experience in frauds caused by tellers in the banking business from 4 private banks, as well as protected data on internal frauds of tellers in the banking were examined. The results revealed that the frequent format of fraud against banks was fake money transformer or depositing money via bank transfer without the actual amount of money. The second widespread fraud was stealing of excessive money from the summation at the end of the day. The most frequent format of fraud to customer was the money withdrawal from non-responsive bank accounts over a long period and a fixed deposit account. The next highest number of customer fraud was error cancellation. There were 3 factors resulting in fraud committed behavior as follow: (1) pressure caused by financial problems, for example, infatuation with gambling, debts, family expenses, desire leading to official and non-official debt collection, and stress caused by work performance; (2) opportunities and vulnerability that may support fraud, for example, customers’ trust. Customers left their book banks or related documents with some trusted employees. For trust of supervisors towards employees, it was often caused by the consideration of branch executives to seek out trustworthy, careful, and familiar tellers to supervise some processes when they were not available or when the number of tellers was insufficient to provide services to customers. Customers often left their verification codes with tellers, which were considered as the key to changing transactions or making any risky transaction. Also, it is considered as the way to empower the position of such tellers and to offer the assignment to only trustable tellers, (3) self-rationalization, for example, the feeling of unfairly treat by the banks so that the teller had to commit fraud to get rid of that feelings or to cause damages against banks. For instance, when tellers make a mistake or cause a missing amount of money at the end of the working day, they may be forced to pay the missing amount out of their own money or have their salaries deducted, leading them to believe that they should keep an excessive amount of money in case there is a mistake of transaction. These three factors that contribute to fraud may interact with the actions of fraudsters, consistent with Fraud Triangle Theory of Donald Cressey (1953).

The guidelines for prevention of teller frauds in banking business could be the establishment of rewards and support as well as the prevention through punishment to balance the behavior of tellers. These guidelines could be divided into 2 forms:

1. the Pre-Fraud Strategy, this is to prevent any financial activities that were divided into 5 elements, as followed: (1) Rules, regulations, and policies must be concisely established. One employee must be prohibited from several duties. Rules on absolute punishment must be established for punishing branch executives for failure to check daily reports and maintain verification codes. Rewards should be given to employees who blow the whistle on behaviors of their colleagues in the manner of frauds; (2) Prevention could be done by working area arrangement to be open and clear. The position of workstations and computer screens of tellers must be clearly seen by executives. Resolution of CCTV should be in high quality in order to see all corners of the branch thoroughly; (3) Subculture should be built in the organization where the branch manager should be able to be approached by tellers. Therefore, they could discuss and consult with the branch manager on all issues, including personal, family, and work-related issues. Strictness on the bank’s product sales should be reduced by assigning sales teams instead of tellers; (4) work potential and living should be improved by consideration of the remuneration to be consistent with cost of living. In addition, ethical trainings as well as suggestions and knowledge on accessing and using welfare loans should be provided to employees; (5) The use of verification code must be controlled by innovation, i.e., application of high-level employee certification based on card and face scanning transactions. In addition, a Central Authorized Unit should be established to approve risky transactions.

2. Strategy of the consecutive process, divided into                2 elements: (1) Implementation of program and a real-time notification system for customers. In addition, there should be a