Strategies Discussed by Alberta Quarcoopome: Minimizing Internal Fraud - Focus on Recruitment and Onboarding Processes (Part 1)
Fraud in the Banking Sector: A Persistent Challenge
In an interview, Lee Lacocca advocated for effective leadership as a preventive measure against fraud. The latest Bank of Ghana (BoG) Fraud Report for 2019, however, points to a different picture, as reported cases of fraud continued to rise. This column, Risk Watch, aims to offer risk management insights to young bankers and professionals, and the increase in fraud cases underscores the need for continuous vigilance.
The BoG report highlights a worrying trend of cybercrime in the banking industry. This category encompasses fraudulent activities committed through email, internet banking, localized payment platforms, and mobile banking. Suppression of cash and deposits was the most common type of fraud, with a significant number of cases traced back to bank employees, particularly tellers, mobile bankers, and sales agents.
To address this issue, the BoG has introduced new directives. These include stricter police vetting for contract staff employed by banks to curtail fraud. The BoG also requires banks to closely monitor transactions and staff, implementing appropriate internal controls. Moreover, the remuneration and working conditions of contract staff and mobile bankers are to be aligned with those of permanent staff, as they are often involved in cash and deposit suppression.
Internal fraud, often a taboo subject, is prevalent in the banking industry despite its severe consequences. Banks tend to downplay the issue due to confidentiality and potential regulatory damage implications. However, this issue remains critical.
The hiring process is a crucial control against internal fraud. There is a compelling argument for banks to recruit staff from communities known for their high moral integrity. Personality tests, employee references, and thorough background checks are also essential. It is noteworthy that a person's character should be the ultimate consideration.
Induction is another vital aspect of risk management. An effective induction process is crucial in orienting new employees and integrating them into the bank's culture. A well-designed induction program should inform new hires about the bank's core values, policies, and the zero-tolerance policy towards fraud. The program may also include lessons on risk awareness and the consequences of fraudulent activities.
In conclusion, banks must prioritize fraud prevention to maintain public trust and protect their assets. A combination of robust internal controls, ethical leadership, and employee education can help reduce the risk of internal fraud. Continuous vigilance, understanding of employee motivations, and the adoption of technology to monitor digital transactions will further strengthen a bank's defenses against fraudulent activities.
Alberta Quarcoopome, a Fellow of the Institute of Bankers, emphasizes these practices in her articles and training programs for young bankers. As the CEO of ALKAN Business Consult Ltd, she continues to share her insights to help the banking sector navigate the challenges of fraud.
For more information, visit www.alkanbiz.com, email [email protected] or [email protected], or call +233-0244333051/+233-0244611343.
[1] Bank of Ghana (2019). Banking Industry Fraud Report. [2] Bank of Ghana (2020). Banking Industry Fraud Report. [3] Quarcoopome, A. (2021). The Modern Branch Manager's Companion. ALKAN Business Consult Ltd.
- The BoG's 2020 Fraud Report continues to highlight an ongoing problem of internal fraud in the banking sector, which underscores the importance of implementing effective hiring and induction policies to minimize the risk.
- To remain competitive in the modern business landscape, banking professionals must invest in education and self-development, especially in the areas of risk management, policy, and finance, to better understand and combat fraudulent activities.
- Alberta Quarcoopome, a recognized expert in banking, advocates for continuous education and implementation of strong internal controls, ethical leadership, and robust induction programs to maintain public trust, protect bank assets, and effectively manage the persistent challenge of fraud in the banking sector.
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