Financial Crimes, Fraud, and Investigation

The banking sector is a critical part of a country’s economy. This is more so the case given that it is actively involved in the holding as well as management of diverse financial assets and the coordination of financial activities for the various other economic sectors. Although at the core of banking is holding of financial assets, other key activities include, but they are not limited to, commercial and personal banking services, insurance, etc. In that regard, therefore, banks happen to be one of the most sensitive sectors in an economy. Bank managers have a responsibility to ensure that all the regulatory standards are observed. Further, they also have a responsibility to ensure that the interests of various stakeholders in the banking sector are secured. The key stakeholders, from the perspective of a bank institution are inclusive of the government and the various regulatory agencies, customers, investors, employees, other institutions in the financial services sector, etc. In seeking to promote transparency – both within and without – the institutional boundaries, banks must adhere to various strict guidelines, restrictions, and requirements. As a matter of fact, the banking industry happens to be one of the most heavily regulated industries in all of U.S. economy. Criminal elements have, however, always found a way of manipulating the system to engage in theft, embezzlement, or other forms of fraud. The said criminal elements could either be employees of the firm, business collaborators, or outsiders working alone or in cahoots with bank employees.

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From a broader perspective, crimes in the banking industry could either be violent robbery or white collar crime. This text concerns itself with white collar crime. In basic terms, white collar crime could be defined as “nonviolent crime committed for financial gain” (Zagaris, 2010, p. 113). On the other hand, in the financial services realm, violent robbery is any criminal act that involves the holding up of a bank in a forceful manner with an intention of making away with money or other related gain. Violent bank robberies have been on a steep decline over the last few decades. Towards this end, the types of crimes the banking industry experiences that have been highlighted in this text largely relate to white collar crime. It is important to note that the various kinds of crimes in the banking industry are so diverse that they cannot be discussed in their entirety in a document of this nature. However, it is possible to assess the main kinds of crimes in the said industry.

From a general perspective, financial crimes involving banks could be inclusive of, but they are not limited to; information and identity theft, insider trading, money laundering, electronic crime, and fraud. These could be perpetrated by both employees and their collaborators as well as by outsiders. From a micro perspective, good examples of insider (or insider-perpetrated) bank crimes are inclusive of general ledger fraud, account takeover, and identity theft. In as far as general ledger fraud is concerned, Singleton, Singleton, and Bologna (2006) point out that this particular crime is perpetrated by insiders who “have exclusive access to accounts payable or suspense accounts, which are used to temporarily record items such as loans in process, interdepartmental transfers, or currency in transit” (74). It therefore follows that in such a case, insiders can easily initiate the movement of funds from on account to another. A bank insider could, for instance, make transfers from the general ledger accounts into personal accounts for an extended period of time. Reconciliations and general ledger entries can then be handed accordingly due to an employee’s unfettered access. Secondly, when to comes to account takeover, a bank employee could act in cahoots with external criminal elements to take over some aspects of a customer’s account. A good example in this case would be were bank employee sets up an internet banking platform for the customer without the account owner’s authorization (and most importantly without his/her knowledge) and then proceeds to initiate transactions from the account. In as far as identity theft is concerned, the ID data of the customer is stolen by an employee of the bank. The said employee then creates credit accounts and ropes in a third party who then assumes the stolen identity and proceeds to make fraudulent transactions. One other creative and rather common banking fraud format involves loss covering. This is most prevalent in the investment and trading divisions of banks. It should be noted that over time, various measures have been undertaken by banks in an attempt to flag fraudulent transactions. Fraudulent behavior, however, continues to thrive in the banking sector. In that regard, it would be prudent to highlight a real-life example of fraud that has taken place in this particular sector in recent times.

Two months ago, an employee of Regions Bank employee was arraigned for allegedly stealing as well as trading in customer account information. Regions Bank is financial institution that presently has its headquarters in the Alabama city of Birmingham. According to Dionne (2020), the 24 year accused person, who answers to the name Amber Jones, “was arrested and charged with trafficking stolen identities and two counts identity theft… stealing upwards $1,000 from multiple accounts, sharing the account information with other people and using the money for food delivery and online shopping for children’s clothes.” Some of those affected include customers who have banked with the corporation for more than a decade. On its part, the bank issued out a statement pointing out that it had zero tolerance to acts of this nature and committed to cooperating fully with law enforcement agencies in the present matter. The bank also observed that once additional details emerged, additional actions would be taken in an attempt to gather more information regarding the extent and nature of the crime. If I were to be called upon to help or assist with investigations on the criminal activity defined above, there are various steps that I would make use of in the interview process. These will be highlighted below.

It is important to note that this would essentially be an admission-seeking interview. This is because it has already been reasonably established that the employee in question was involved in a crime, i.e. theft of customer identities. The other interview option would have been the information-seeking interview. An admission-seeking interview, according to Golden, Skalak, and Clayton (2006) is the “the most challenging of interviews” (354). To begin with, I would first prepare and plan for the interview. Preparation in this case would involve getting all the details of the activity being scrutinized and the role that the employee in this case played. This information could be derived from both information-seeking interviews and other independent evaluations. It is important to note that in this specific scenario, I would be seeking an admission of guilt. The confession obtained must, however, be valid. Indeed, as Albrecht, Albrecht, Albrecht, and Zimbleman (2008) point out, under the law, for confessions to be deemed valid, they must be obtained voluntarily. For this reason, I would ensure that I do not engage in any action or behavior that could be deemed coercive. If the employee were to freely confess, I would ensure that I get a written confession. It should, however, be noted that oral confessions would also be admissible. However, in the words of Albrecht, Albrecht, Albrecht, and Zimbleman (2008), “written confessions have greater credibility” (296).

There are several interview techniques that I would deploy in an attempt to derive a confession. First I would seek to establish rapport with the employee. According to Kranacher, Riley, and Wells (2010), this could be achieved by engaging in what is commonly referred to as ‘small talk.’ The authors, however, point out that there is need to ensure that the said ‘small talk’ is not overdone. Two to five minutes of small talk would be sufficient to break the ice and win the confidence of the subject. The relevance of theme development cannot also be overstated in this case. In the words of Kranacher, Riley, and Wells (2010), “the goal of the theme is to get the respondent to ‘buy in’ to assisting in the interview. This is important as I would not be expecting the employee of the bank to confess on his own volition. Therefore, in my case, I would attempt to package the entire undertaking in such a way that a confession is presented as being in the subject’s best interests. This is to say that to some extent, I would be offering him a way out to do what is right. Throughout the interview, I would be monitoring the subject with an intent of decoding his reaction to my questions. This would be inclusive of observing key non-verbal cues and using these to direct my line of questioning. In this final analysis it is also important to note that I would be mindful of both the location of the interview and the participants in the same. Privacy is of the essence. The minimum number of people should be allowed into the interview room. Ideally, the employee in question and I should be the only participants. An attorney could be allowed in at the request of the employee.

It is important to note that crimes of this nature are reported to law enforcement officers on a regular basis across the nation. It therefore follows that it would be prudent for banks to embrace various strategies in an attempt to reign in behavior of this kind. These will be explored below. Firstly, in seeking to investigate the present criminal activity, I would essentially track financial transactions in the concerned accounts with an aim of coming up with a forensic reconciliation. In this particular case, affidavits should be presented clearly indicating that the victims did not initiate the transactions in question. In seeking to ensure that internal controls are improved so as to prevent an occurrence of the very same fraudulent activity, there are a number of suggestions that I would make. To begin with, I would recommend that the bank implements systems and processes of red-flagging accounts that could have possibly been compromised. The system should ideally cover credit card, savings, as well as checking accounts and sound an alert (based on some conditioned parameters) when suspicious behavior is detected. Secondly, there is need for the bank to institute audits on a periodic basis. Lastly, and perhaps most importantly, I would recommend that customer addresses be vigorously verified especially in those instances relating to credit card and debit card requests or where there are requests for change of address. It is also important to note that in seeking to protect customers from identity theft threats originating from both within and outside the bank, the bank must engage in customer education – in which case customers are sensitized on the measures that they ought to take to protect their private information.


Albrecht, W.S., Albrecht, C.C., Albrecht, C.O. & Zimbelman, M.F. (2008). Fraud Examination (3rd ed.). Mason, OH: Cengage Learning.

Dionne, B. (2020). Regions Bank Teller Accused of Stealing Customer Identities Faces Felony Charges. Retrieved

Golden, T.W., Skalak, S.L. & Clayton, M.M. (2006). A Guide to Forensic Accounting Investigation. Hoboken, NJ: John Wiley & Sons.

Krancher, M., Riley, R. & Wells, T.J. (2010). Forensic Accounting and Fraud Examination. Hoboken, NJ: John Wiley & Sons.

Singleton, T.W., Singleton, A.J. & Bologna, R.J. (2006). Fraud Auditing and Forensic Accounting (3rd ed.). Hoboken, NJ: John Wiley & Sons.

Zagaris, B. (2010). International White Collar Crime: Cases and Materials. New York, NY: Cambridge University Press.