In light of what happened on a grand scale over a long period of time without DOJ intervention until 2024 with TD Bank in the US, insider fraud can be part and parcel of outside attacks on consumers and the financial institutions involved if no proper surveillance or even effort is made to monitor suspicious transactions and unusual activity closely. Hence, Mr. Ho’s Linked In post here is a timely reminder for financial institutions to take all necessary precautions to screen staff to ensure they are not part of the problem in detecting and preventing consumer fraud.
Consumers are trusting their financial institutions to look after their savings and investments with the utmost attention and integrity, so the risk of being defrauded is reduced significantly. If bad apples exist within the institution, they can certainly exploit customers when they may least expect it.
Triston Ho
Helping Highly Regulated Organizations with Trusted Analytics, AI, and Governance
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When we talk about fraud, most people immediately think about cybercriminals, scams, and external bad actors.
But some of the most damaging incidents actually come from within the organization.
Employees and trusted insiders already have access to systems, customer information, business processes, trading platforms, and communication channels. When something goes wrong, it can be difficult to spot because the activity often appears legitimate on the surface.
Internal fraud today can take many forms:
– Unauthorized access to customer information
– Collusion with external parties
– Circumvention of approval processes
– Insider trading and market abuse
– Information leakage
– Misuse of privileged access
– Suspicious communications intended to bypass controls
What makes these cases particularly challenging is that the warning signs are often spread across multiple systems. Looking at transactions alone is rarely enough.
Organizations need to connect signals from employee behavior, trading activities, communications, operational events, and customer interactions to build a complete picture of risk.
This is where analytics can make a real difference.
By combining trade surveillance, communication surveillance, behavioral analytics, and real-time fraud decisioning, organizations can identify unusual patterns, uncover hidden relationships, and investigate potential misconduct before it becomes a larger financial, regulatory, or reputational issue.
As regulators continue to increase their focus on conduct risk and employee accountability, I expect insider risk management to become an increasingly important priority across the financial services industry.
For those interested, SAS has a good overview of how modern fraud decisioning can help organizations detect and respond to these risks in real time:
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