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72% of Banks Say Their Employees Committed Fraud
yahoi writes "The financial crisis appears to be exacerbating fraud by bank employees: a new survey found that 72 percent of financial institutions say that in the last 12 months they have experienced a case of data theft by one of their workers. Meanwhile, most banks don't want to talk about the insider threat problem and remain in denial, says a former Wachovia Bank executive who handled insider fraud incidents at the bank and has co-authored a new book called Insidious — How Trusted Employees Steal Millions and Why It's So Hard for Banks to Stop Them that investigates several real-world insider fraud cases at banks." The article dispels one assumption that might commonly be made about such insider fraud: "Interestingly, it's not the stereotypical offshore or outsourced employee who's most risky to their organizations. Nearly 70 percent of financial institutions say their full-time employees are most likely to pose an insider fraud threat..." Technology workers placed third in the roster of the job categories most abused.
Is that not counting executives?
If 72% of financial institutions say they've experienced data theft, how do "most banks" remain in denial? It sounds like "most banks" just admitted it.
Also, I'm not sure data theft is the same as fraud.
Is this really a case of it being unexpected? Banks, which handle lots of money and are generally unwilling to pay for honest talented staff see mishandled cash? What a surprise!
Next article, "Investment Bankers are overpaid for the returns they generate on their transactions!"
"Trust, but verify."
These people are in positions where they have to have access to the information to do their jobs. Locking them down so they can't get to the data without a partner would double labor costs (much more expensive than the 1-4% quoted in TFA.)
So the best answer is: give them the access they need, tell them you're logging it all, log it all, and *analyze the freakin' reports!* There are so many reports out there in most businesses that just get ignored. But we're talking about the early warning signs of theft, and they can't be ignored without consequences.
John
Seriously, if there are humans in involved and money involved, corruption ain't far behind.
www.voiceofthehive.com - Beekeeping and Honeybees for those who don't.
The article dispels one assumption that might commonly be made about such insider fraud...
Am I the only one that is concerned that our financial institutions are assuming things relating to their security policies? Because it's common knowledge in our industry that most security threats come from inside, not outside, the organization.
#fuckbeta #iamslashdot #dicemustdie
That bank workers steal money like I steal stationary from work isn't some giant revelation.
Doesn't seem to be hurting profits though. At least in Canada we may not have that big of a problem.
I tried to think of a good sig, and this wasn't it.
I recall a bank hitting my brother's account with a long list of overdraft fees when he never bounced a single check. Turns out that one month he was trying a new budget strategy where he wrote all of the checks for that month's expenses and dated them for that day. At that time, he didn't have the money in his account to cover those checks. But he never sent them out until after he and his wife had deposited money to cover those checks. The checks were presented to the bank at a time when the money was actually in the bank. They paid all of those checks and then charged him $20 for each one that was dated as described. He never bounced a check. The checks were never presented to the bank when there weren't sufficient funds in the account. How did they justify that action? Who knows...
And even now, banks are playing games with other fees and charges. Who writes checks any more anyway? Your bank may already be doing this... How many transactions per month are you allowed to have before they start charging transaction fees?
All these companys want you to be totally loyal to the company. The job comes before your life, friends, and everything else. They demand loyality above everything.
And yet... are most companys loyal to the employee? Fuck no! You're 100% replaceable. We don't really need YOU. Get back to work or you're fired. Sick? Come to work anyway! You did such a great job on that project. have some perks! more money? no. you wont get more money.. but look! pizza on fridays! wooo!
Nobody should be suprised that many employees have a crap attitude about their jobs. And will steal any chance they get.
You want real loyality from employees? PAY US MORE. We don't work here for our health or because we like it or for the perks or the lovely 'family oriented' way you do business. We work here because you pay us.
And now with the economy fuckup. The first things to go are perks and pay raises. Yet you still want the same loyality from the employees.
Good luck with that. We're gonna steal anything not bolted down. Get all we can before the company gets rid of us.
I'm a contract employee at one of the top ten banks in the nation, employed in website development. Within the first week I was given the keys to the kingdom in spite of the bank never even performing a rudimentary background check. Also in the first week, I discovered that it would be absolutely trivial for me to steal the credentials of every single user of the site and completely cover my tracks. It has now been MONTHS since I brought it to the attention of the people who I answer to and there is still not even a proposed solution to the problem. Scarier still is that any one of 75-80 people could do this and it does not even require collusion. This to me shows the "high regard" that banks have for your money.
The other 28% must be small banks, or in denial. If just 1 percent of the population is criminal, you have to anticipate 1 criminal for every 100 people you hire. IANA statistician, but even if you have well under 100 employees, the odds are still pretty good. I think it would be like the birthday problem, where the odds of somebody in a relatively small class having the same birthday as you are surprisingly high.
Of course, I'm not sure what percent of the general population would commit bank fraud if they had the opportunity. That doesn't matter of course. People who are likely to commit bank fraud will, of course, seek out jobs at the bank. As the famous bank robber said, "that's where the money is".
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
They're in denial because they are not aware of the full seriousness of the issue.
I discovered something that amazed me. I was trying to resolve a client's quite simple software issue. I worked with managers of two large banks (tens or hundreds of thousands of commercial accounts). I discovered that one of the banks had no technically-knowledgeable employees, except for computer maintenance staff. They used contractors for everything else. The contractors with whom I talked had little technical knowledge.
The other bank had either no one who was technically-knowledgeable or just a few people.
They don't have just have problems with fraud, they have problems in every area where technical knowledge is needed. They cannot resolve modern problems because they have little or no knowledge of them, and they don't want to learn. Technically knowledgeable people are apparently seen as an annoying necessity.
With employees of a third large bank, at which I have personal and business accounts, I found that I could get a laugh by saying I saw their web site and thought that high school students should not write web sites for banks. Later the web site was improved.
Has anyone seen my red stapler?
Orwell was an optimist.
It seems the motive is typically to get a "loan" by a lower level employee which will be paid back at some point. It would seem that the employees are in fear to actually ask their own bosses to aid them in a situation of financial strife.
Isn't that what banks are about? Making loans?
It seems that inside the banks their is a pervasive culture of fear/shame/envy by staff of the owners. The fact that management seems to be unable to get inside this situation is indicated of a manager/employee relationship meltdown.
If I owned a bakery and my employees were stealing bread to feed their families cause I pay them nothing -- that in most peoples mind is a hint about how my relationship as owner to my employees is going.
If they are stealing bread but are not starving but in fact well off thats something else - envy and greed.
In any case a Bank which gets public assistance like in "too big to fail" or some other way should begin to be held publicly accountable for internal losses -- tangible assets and data privacy breaches. Till today no one is really reporting this number out of fear in losing the public trust. When the bank fails of course the horse it out the barn doors already.
I've seen this happen to a co-worker. She was generally quite out-going and talkative. But she started being quieter over time. One day it was announced that she no longer worked at the company, and through the rumor mill I found out that she had embezzled about 5 grand (mid 90's dollars) with the help of her boyfriend. She discovered by accident that some vendors would double-pay an invoice if a second copy was sent by mistake. Thus, she decided to send fake invoices to vendors with a history of double-paying, but with her boyfriend's bank account as the bill-to address of the 2nd copy. Eventually somebody noticed the bogus addresses.
The problem is that they didn't file formal charges because they wanted to protect the reputation of the company. They did confiscate all her future benefits, though; so it was probably a net loss to her.
However, by not prosecuting they set themselves up for a second attack. For another employee of the same accounting department made off with about 25 grand a few years later. I'm sure the second guy factored in the non-prosecution of the first attempt.
I'm not sure how to solve it, other than perhaps making prosecution mandatory. But I doubt companies want that kind of legal complexity for gray areas or where the evidence is weak.
Maybe some kind of "secret victim list" in prosecution, but that goes against the concept of jury-by-peers. The chance of one out of 14 jurors (with 2 alternates) spilling the beans is fairly high. And there's other issues with public disclosure laws.
Table-ized A.I.
I have applied to many banks to work as a teller; its a nice, cushy job that pays ok and is respectable. I have never been offered a job. I found out through some friends that banks will not hire anyone with bad credit; I kind of wondered why, as, if an employee tried to steal anything, they have a fuck-ton of cameras and security systems in place at any bank. I happen to have bad credit, so they assume that might try to screw them or something. It kind of sucks, but seeing this story, it makes a lot more sense.
I imagine that outsourcing to 3rd-world countries increases the risk because the payoff is much higher relative to the local currency (more purchasing power) and it's much more difficult to prosecute across the ocean.
This is not saying that 3rd-world employees are "more evil", but rather the relative temptation is higher and the risks of formal prosecution is lower.
Table-ized A.I.
I guess it's only fraud when the bank is the one getting ripped off.
When they're handed hundreds of billions of dollars of taxpayer money to shore up bad debt and open up the faucet of commerce, but then instead decide to stop lending and hoard the cash... that's... something else? Right?
it's a jaded fact that corruption is quite common in every activities of humanbeings,not the least when the economy is in recession.the crucial problem is whether or not there have been an effective system to pull the plug on it.
72% of banks say employees have committed fraud. Other 28% are lying or naive.
"Interestingly, it's not the stereotypical offshore or outsourced employee who's most risky to their organizations.
that was not somebody attempting either a subterfuge or the implantation of a subliminal suggestion.
You see, it may very well be true that "offshore" employees in banking have less culpability, thus far...which - entirely coincidentally, I'm sure - corresponds directly to the amount of penetration into banking that offshoring has - thus far.
Interestingly, don't you think that such statistics provide a a nifty argument for offshoring banking?
Who gathered and "analyzed" this "data", again?
Orwell: "In a Time of Universal Deceit, telling the Truth is a Revolutionary Act"
This /. submission is about employees stealing data, not money.
I once overheard Bankers speaking and they do blacklist persons if they hurt the institution enough.
Though no charges were filed often the reference is veiled: "let go due to irregularities in performing the job" which is a whopping hint to the next employer they were doing low level fraud or in the more sinister case it was a recommendation for a let go employee -- to a competitor.
... and I am getting a kick out of these replies.
The other 28% just don't know about it.
In a bar one evening I pointed out ''how simple it would be to send a few million to a bank in Rio''. I was told ''Who wants to live in Rio?''. They were not interested in trying to fix it.
About that time I did some work at a bank in London. Every morning the director of securities arrived in the IT department with a list of errors from the overnight run (all audit trailed, etc). He got a programmer to fix them which he did by running up an SQL interpreter. There was no oversight, the director walked away before this was completed, there was nothing to stop the programmer from doing it whenever he wanted. The programmer was employed through an agency, not a bank employee.
I met someone at a social function, asked him what he did: ''I am a banker, I get to rob people legally'' -- at least he was honest!
I could go on. This sort of stuff is endemic.
I had a friend years ago that was a detective on the Las Vegas Robbery squad. He told me that the average armed robber gets away with something like $5,000. The average electronic bank robbery gets away with over $500,000. He also told me that they almost never ever catch anyone committing a robbery by computer, but they get most of the people sooner or later that commit armed robbery. He was talking about both inside jobs (mostly involve some sort of computer) and outside computer attack type robberies here to clarify.
He said it was not so much tracking down a suspect, but that the nature of the electronic / insider robbery often lacked the traditional physical evidence that would really lead to a conviction. The banks and businesses don't really want to cooperate for PR / insurance / liability reasons. The nature of the evidence is not very compelling to a jury. Often it is difficult to properly get warrants across multiple jurisdictions in a timely manner and in such a way that the evidence can be used in court. Most importantly it just all around cost more money to investigate and prosecute, as it requires very expensive and specialized skills that most police departments (including the FBI) really do not have the resources to do properly. There is not a lot of political motive at the top of law enforcement and everyone else to do unless it is a really high profile robbery type thing that they have to do.
Living in Chile
someone was stealing other people's food out of the refrigerator. they decided that the thief was 'just hungry' and we should all chill out.
but they wont give health insurance to the janitor.
the guy that runs the technical division has no degree and people are 'proud' of this, like Palin proud.
This headline is missing the point that all banks commit theft, that's what keeps them in business and pays for their excessive bonuses.
Anyone that thinks otherwise doesn't understand fractional reserve banking.
Until we have money that is based on some real commodity money has no inherent value, it's just a points system ungrounded in reality.
at my bank being a teller is one of the nightmarish s*** jobs with people screaming at you all day for no reason. the pay sucks too.
with all your logging, report analyzing, etc... who is going to watch ---your--- shifty ass? after all, you are the one who seems overly obsessed wit the human capacity for fraud.
"72% of Banks Say Their Employees Committed Fraud"
is much better than
"Banks Say 72% of Their Employees Committed Fraud"
The world belongs to those who get up early. - I'm far from being the king of Earth then
"[...] 72 percent of financial institutions say that in the last 12 months they have experienced a case of data theft [...]. Meanwhile, most banks [...] remain in denial, says a former Wachovia Bank executive"
With such math from a bank executive who needs fraud?
A VERY close relative of mine works in compliance in the finance industry. He worked for a credit card company that was going under and cooking the books. He told the truth in his report to the regulators but nothing happens very quickly. The company was then taken over by ex-management of another credit card company who quickly discovered the real situation.
Now they could have used him to help them sort things out, but instead of that they started cooking the books themselves, realised he knew too much and made him redundant. He fought it as unfair dismissal but didn't get very far, he had a case but would have ended up costing as much as he would get.
The irony is that he now works in compliance at the company where the new management of his previous company had escaped from, where part of his job is uncovering what the previous lot were up to.
My take on all this is that the financial services industry is rotten from one end to the other.
Si hoc legere scis nimium eruditionis habes.
Better security to prevent this, a bank should have more than enough records to be able to work out who had access to what and when, then more firing of fraudsters, that leaves lots of new jobs open for other people, at some point after a turn around period it will have more honest people in and things will slow down. Sure the 1 out 1 in nature of it wouldn't help the unemployment figures, but sod those that deserved to get fired.
"You'd think the banks would have been smart enough not to buy their own BS and not own those MBS's themselves..."
Those who were making millions of dollars a year did not care if buying trashy securities would eventually bankrupt their banks. First, they didn't care about the company for which they worked, only about themselves.
Second, they often talked of "moral hazard" and laughed about it. They knew the U.S. taxpayer would pay for their damage.
The recent financial fraud was only a continuation of the Savings and Loan kind of fraud. Both were deliberate schemes.
http://www.nytimes.com/2008/04/27/magazine/27Credit-t.html
We're not even talking money laundering-style "willful blindness"-class fraud, either.
"If you really believe that the government will falter to such a degree that it will not be able to honor its FDIC obligations, I suggest you remove your funds from your bank, and put them into food storage, ammunition and firearms, and other dystopian future necessities."
Last I heard, there were about $13 Trillion deposits in the 8,500 banks in the U.S., and IIRC, about $4-5 Trillion was covered by the FDIC. That's probably higher now, what with the $250,000 limit through the end of the year, and the unlimited business account coverage through December.
Where exactly can the U.S. get $5 Trillion? The bond markets have been rejecting the massive amounts of Treasuries since last summer, which led the Fed to start buying it's own bonds (Quantitative Easing, which you may have heard of).
The FDIC and Feds simply don't have the funds to cover the entire banking system. Not without destroying the economy.
There are ways of protecting your cash and minimizing your risks of bank failures. For one thing, start relying on a safe bank rather than put your faith into BofA, Citi, Goldman and the other crooks who have already swindled your children out of a good deal of their future revenue.
The easiest way to find a safe bank is by looking for one with a low Troubled Asset Ratio (TAR). You can do this here:
banktracker
There are other ways, but this is the best starting point.
Look for a TAR of under the national median. If your TAR value is over 30, get out of there quickly, as it can jump fast. And the FDIC has been closing down banks with a TAR's of 50 or more.
Keep in mind that even these numbers can be manipulated. The top 5 big banks have TAR's of just over the national median, but this is starting to crack. BofA jumped from about 14 to 27 with the latest numbers.
And to put this in perspective, I recently did a search for banks in Silicon Valley with a low TAR ratio, under the national median. I found exactly 4.
One had stopped taking deposits, and the other is for business accounts only.
Oh, and the Credit Unions are generally in even worse shape.
Because fractional reserve banking itself is fraud, not much different than counterfeiting: it hurts us all and puts the profits in the hands of a few.
At some point in time someone somewhere said: "Gee, I wish I could lend out money I don't have and collect interest on money I don't have." and fractional reserve banking was born. It's all one big fraud.
As a Sys Admin at a community bank I can tell you a few things that are setup to supposedly prevent this. All banks that are insured by the FDIC have to be audited by state and federal auditors on a year to year rotation. Most of the procedures they follow look like they were written in the early 90's. They are very trusting and data can easily be forged and turned in. Most of these auditors seem to have little to no education in Computer Science or related fields, especially in security. They tell me that all open source software is prohibited as it is not secure, but that is a cover up for their inability to regulate it or create procedures to audit it. Our last audit consisted of 1 day of asking about 20 questions, they said that IT is on the bottom of the list this year as they are focusing more on loans and lending practices. Sometimes I worry a little about banks with lesser educated staff and how prone they are to internal and external attacks.
If i am not mistaken recently FDIC announced that it has nowhere near the amount of money needed to meet its obligations, bacause situation in the bank sector is in much worse shape than they predicted - we are talking about tens or even hundreds of billions. What it means?
This only matters if people try to take out all of their money from banks in cash. As long as people just leave things where they are, money is in this day and age is only bits in a computer.
If one bank is shut down, their "assets" can be transferred to another, and your bank account will still be fine as the computer says it still has the same amount.
It's an imaginary / psychological concept that pieces of paper and little coins have the value that they do. There is nothing intrinsic in them--and there is nothing intrinsic in gold either. I would argue that only things like food and clean water are inherit value to a human being. Everything else is a Jedi mind trick you play on yourself.
I thought the MAIN business of Banks was to defraud their customers. So why isn't this 100%?
> if only they were redeemable in gold and silver as once US constitution stated...
1) Gold will not solve the problems. It does not address any of the real problems.
Can all you idiots stop thinking gold is going to somehow magically avoid those problems, there's no magic in gold. The financial problem was caused by poor/bad regulation. Heck the US federal reserve still refuses to answer good questions about where some trillions of money went. Go google for "federal reserve trillions". There's also cheating and bad regulation in the stock markets - a privileged bunch get to see stuff 30 milliseconds before the others - see http://www.nytimes.com/2009/07/24/business/24trading.html
Basing your currency on gold will not save you when there's poor regulation and corrupt people in high places. Just because the currency was backed by gold would not have stopped people from bundling risky loans into a High-Grade Structured Credit Strategies Enhanced Leverage Master Fund and selling it to old ladies who have a different understanding of what "High Grade" and "Enhanced" mean.
I know a guy who does some finance stuff, and he says he's not providing liquidity or any of the bullshit finance people spout to justify their existence. He says he's just transferring money from the stupid to the smart (him). He says at least he is honest about it - to a few of us at least ;).
They used gold back then and the serfs still got screwed by the barons, and economies still went bust. Looks like the current batch of serfs are still too stupid to understand what is going on. And "barons" like my friend will just have you all as snacks.
2) Gold is too useful to use as currency.
Yes it is rare, and that is the big problem. If all the countries in the world started using gold as a currency, it would be too expensive to use for some stuff where it is really useful (or it would make things more expensive without good reason).
Think about it. How much gold is there to go around for the 6 billion people in the world?
Estimates of the total amount of gold available (that is already produced in reasonable purity) in the world range from to 161,000 tons to 311,000 tons. That roughly works out to about 25g to 50g of gold for each person in the world. Or 5 to 9 trillion US dollars (assuming USD1035 per troy ounce). Yearly production is only about 260 milligrams per person.
At current prices that's like saying everyone in the world has USD830 to USD1700 on average. And worse every year they only gain USD9 in net worth. But there's a lot more money, _goods_ and services out there so if you base your currency on gold, it means that 50g of gold will end up costing a lot more, more so if the world population continues to increase, or people are productive in other ways ;).
Then gold will end up more expensive to use for a lot of useful things we are currently using it for, and maybe even too expensive in some cases. And for what benefit?
So it's a stupid idea ok? Except for those who have bought a lot of gold when it was cheaper and are trying to push the prices up.
It's not stealing... it's "bonuses"...
And some organizations produce fraudulent CSS that make web-pages act funky. Our survey showed that one of the biggest problems was found at sla^'~.[NO CARRIER]
-1 Truthful Troll
This weekend there was an article in the travel section of NYT about how US credit cards are being denigned in Europe because we don't use Smart Card with pins to prevent fraud. The US credit card rep said it was because fraud was not such an issue in the US. HaHa. They are also in denial about that also or they just don't want to admit it.
These are the same banks that are feasting on usurious interchange rates that all merchants pay to let their customers use credit cards. These are the same banks that want to foist off all responsibility for securing their credit cards onto the people least equipped, i.e. the card holders and the merchants, by inventing PCI security standards. Yeah, this makes sense, 72% of the banks have insider fraud, but as they tell us the biggest security flaw is at the merchants location.
If you have to stockpile, choose guns, ammo, canned goods, medicine, and a water filtration system, in that order. Because with enough of the first two you can always find a way to convince your neighbor to help with the rest.
You have limited supply of canned goods, medicine and water and a neighbor that hates you... You better hope you never fall asleep. ;)
I, for one, will pack much more of the other things. Then I will share them with my neighbor willingly before he threatens me. Then I also have a friend with a gun and he can make enemies of whoever else he wishes... And if I - for some reason - don't like the situation (when canned good run low enough)... I can just wait for him to fall asleep. :)
At one of the banks, I talked with the top manager of IT. The work would benefit the banks. I got the impression that there weren't many people under him who did anything more than repair computers and routine updates.
Maybe conditions are different in the U.K.?
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