Fraud Prevention-Line or support function

Fraud prevention is often treated as a cost centre rather than a strategic business unit.what can anti fraud professionals do to change the perception.i truly believe that if collections can be treated as a line function then Fraud prevention cell too should be treated as a line function rather then a support function.I feel that this unit is always treated as a supprt unit due to which it doesn't get it's dues.I feel that if goal sheet for the unit is revised to show more of tangible results then it may help in changing the perception.At the same time repositioning is required to move potential savings to actual savings.one step could be to conduct fraud checks at the end of all process so that true savings can be shown.for eg post credit sampling would highlight cases with ctaual savings as all these are approved cases.would like to hear other thoughs about this

Comments

Anonymous said…
Tottaly agree with you and the same line og thinking also happens here .
Changing that is a continous work. Our best results have been when we work together with Business Units monitoring their products, for example, is a campaign having sucess , hor many services are being deactivated/suspended, etc
March 13, 2009 at 10:52 AM
Anonymous said…
The strategy of control of the fraud must consider measurements respect to the impact in the results of the avoided fraud. Also with efficient tactics of transference of the risk via contracts with the parts outside direct control of front (agents, distributors) it is possible to align the efforts of prevention in the origin being reduced the costs of the function.
March 13, 2009 at 10:55 AM
Anonymous said…
Although agreeing with Osvaldo , I have some remarks.
First, measurement the impacts of the avoided fraud, its not exact science. Whatever the method , the results wil always be questionable. In fact , how to measure something it never happened ? What we did was to quantify similar situations to the ones avoided and make some extrapolation.
Second, transferring the risk, has to be balanced to the amount of risk agents and dealers are willing to take. They don't have the same resources we have as an operator to validade contracts so we can inccur in antagonizing our dealers network and end up with none.
March 13, 2009 at 10:56 AM
Charanjeet said…
Another problem with first point mentioned is that at times people take the stand that same case would have been declined by credit team even if fraud team had not declined it.so if we do fraud checks at the last stage then we can claim that it's the last line of defence & whatever we have identified had been cleared by other units so amount involved can be claimed as actual savings
March 13, 2009 at 10:57 AM
Anonymous said…
think the root cause of the problem is in structuring of goal sheets/templates for fraud control professionals. I feel the primary objectives of the unit in the banking industry should be as follows:
1) Take proactive action to ensure fraud is prevented - In the lending business, this may be done by detecting fake/forged documents and/or falsification of information before a loan account is booked. All checks for authenticity of documents and information furnished by customers should be the responsibility of the fraud control team and any fraud application detected should be considered as a "save". The save may be quantified in terms of no. of such applications detected or gross loan amount or both.
2) Take reactive action to ensure fraud losses are minimised - In lending, once a fraud is identified the bank should provide for the losses and initiate appropriate recovery action including criminal action against the fraudsters. The net fraud loss (i.e. provision taken for fraud minus the recovery made) needs to be minimised and should be part of the KRA of the fraud control manager.
3) In the wealth management business, the aim should be to ensure 100% adherence to KYC (Know your customer) and AML norms. This should be a zero tolerance area and no account should be identified post-facto (after a/c opening) that is in violation of these norms. This should take care of fraud prevention.
4) Fraud detection may be carried out through transaction monitoring based on triggers linked to momentum and velocity of transactions. Accounts identified as fraudulent need to be examined thoroughly and a root cause analysis done to identify what went wrong. This feedback should go to appropriate stakeholders so that applicable policies are finetuned. The feedback loop is critical in any fraud investigation for any industry.

Comments and views are highly welcome
March 13, 2009 at 10:58 AM
Abdul said…
Hi you sounds more intresting, Am a area collection manager, in the line of my duites i alwasy end up in Mess due to fraud .

RCU has to be more strong and vigil. its more important than a credit team.
July 6, 2009 at 5:07 PM
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