The Association of Certified Fraud Examiners, ACFE, has released the Banking and Financial Services Edition of its 2020 Global Study on Occupational Fraud and Abuse.

According to the 2020 report, 19% of all cases of occupational fraud reported were in the banking and financial services industry. This supplemental report examines those 386 cases, providing details such as the range of losses, standard detection tactics, and statistics regarding the victim organizations.

19% of all cases of occupational fraud reported were in the banking and financial services industry

Range of Losses

Of the 386 cases reported in the banking and financial services industry, 125 of them occurred in the United States and Canada. That’s over 32%! These cases had a median loss of $76,000, below the global median loss of $100,000.

Although the median loss is lower than most other regions, the United States and Canada experienced 50-89% more cases than the other regions. In addition, the US and Canada experience a median duration for a fraud scheme of six months, where the global median duration is eight months.

Asset misappropriation accounts for 85% of all cases but the median loss for those cases is the lowest.  Financial statement fraud, only accounting for 10% of all cases, resulted in a median loss of $1,600,000.

Detecting Occupational Fraud

The study discusses several anti-fraud controls that organizations can implement to improve detection and reduce the amount of loss. Some of these controls include performing external and internal audits and establishing a code of conduct.

Tips are by far the most common method for detecting fraud with 46% of all cases reporting fraud was initially detected through a tip reported by a customer, employee, or vendor.

It was determined that organizations, where hotlines were established, resulted in a lower median loss and duration for fraud and that whistleblowers used a variety of reporting mechanisms such as email, mailed letter/form, telephone hotline, web-based/online form, and fax.

Victims of Occupational Fraud

The report also gathered information about the organizations that fell victim to organizational fraud to better understand trends. The collected data analyzes how an organization’s size relates it its occupational fraud risk.

The data shows that the percentage of cases in organizations with fewer than 100 employees is significantly lower. However, the median loss is 23% higher in smaller organizations.

This report is a reminder that despite the financial service industry's regulations and controls, fraud can and does still occur and organizations should take precautions to prevent it from occurring. The audit team at Brown Edwards offers experience in performing internal audits and procedures to help your business establish anti-fraud controls to keep you safe.

You can download the full Banking and Financial Services Edition of the Report to the Nations 2020 Global Study on Occupational Fraud and Abuse.

Download the Report

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