To effectively protect the consumer and the organization, it’s paramount to delve into the human side of financial crime, says Kelly Richmond Pope, an expert in risk, forensic accounting and white-collar crime research.
By Khalil GarriottThe trillion-dollar fraud industry is showing no signs of slowing down, and banks can stay vigilant by understanding the nature of fraud and equipping their institutions with the best tools to combat the growing problem.
To effectively protect the consumer and the organization, it’s paramount to delve into the human side of financial crime, says Kelly Richmond Pope, a nationally recognized expert in risk, forensic accounting and white-collar crime research.
She defines fraud as the absence of sound, ethical decision-making.
“When you see how the profile of white-collar felons has changed during COVID-19 — you see how pharmacists, entrepreneurs and chiropractors are engaging in fraud; PPP fraud — the profile of the person has changed so much,” Pope says.
In her new book, Fool Me Once: Scams, Stories, and Secrets from the Trillion-Dollar Fraud Industry, Pope examines bad actors’ motivations, victims’ vulnerabilities and whistleblowers’ perspectives to provide a better understanding of fraud and expand ways to identify and mitigate it.
“Fraud never sleeps, so it’s important to stay diligent and put internal controls in place,” she says. “It can happen, and it does happen.”
Institutions should examine and modify their internal processes to ensure consumer protection and privacy, advises Pope, a forensic accounting professor at DePaul University.
“I became addicted — a good addiction — to trying to understand how fraud happens,” she says.
She lists commonly missed red flags to watch for, including unrecorded transactions or missing records, fund transfers to offshore banks, bank checks written to cash in large amounts and continuous or unusual fund transfers among company bank accounts.
Banks and their customers can also take advantage of all the resources offered by the American Bankers Association and the ABA Foundation to combat fraud, such as Scam City, a free and interactive game in ABA’s multi-award-winning anti-phishing campaign, Banks Never Ask That.
“We’re trying to educate customers on scams and what banks would and wouldn’t ask. It’s trying to let customers know, in a fun way, what’s going on,” says Paul Benda, ABA’s senior vice president for operational risk and cybersecurity.
ABA’s other resources to fight fraud include tips for consumers to protect their financial identities and the new ABA Check Fraud Claim Directory for banks of all sizes to efficiently resolve check fraud claims.
Pope adds that it’s important to “speak candidly about fraud.”
“Storytelling is so powerful,” says Pope, who directed and produced the award-winning 2017 documentary, All the Queen’s Horses, which explores the largest municipal fraud ($53 million) in U.S. history. “It allows us to talk about things we need to talk about in a less threatening way.
“Fraud does not happen in a vacuum — but in a village,” she says.