ACAMS: Fraud Foundations

1. Introduction to Fraud
Introduction
• AML superhero case
• What would you do?
• Feedback
• Learning objectives

What is fraud?
• Definition of fraud
• Fraud (case example: voice phishing)
• Characteristics of a fraudster
• The concept of predicate offense
• Fraud is related to other financial crimes

Categories of fraud
• Internal versus external fraud
• Internal versus external fraud (case study: inside fraudster)
• Internal and external collusion fraud
• Collusion fraud (case study: bank insider)
• Recurrence of fraud
• Staying current on fraud

Consequences of fraud
• Consequences of fraud on individuals
• Consequences of fraud on individuals (case study: romance fraud)
• Consequences of fraud on an organization
• Consequences of fraud on an organization (case study: Wells Fargo fake account scandal)
• Consequences of fraud on society
• Consequences of fraud on society (case study: Bank of America mortgage fraud)

Review
• Review questions

2. Identifying Fraud Risk
Introduction
• An effective fraud risk assessment
• What would you do?
• Feedback
• Learning objectives

Risk overview
• Types of risk: operational, legal, concentration, reputational
• Types of risk: reputational (case example: Volkswagen emissions scandal)
• Regulations related to fraud

Risk categories
• Categories of risk: customer, jurisdiction, product, channel
• Channel risk
• Third-party payment processor risk and red flags
• Customer risk (case study: My Big Coin)

Know who is being defrauded
• Know who is being defrauded
• Know who is being defrauded (case example: correspondent bank)
• Know who is being defrauded (case example: Wirecard)

Risk-based approach
• Risk-based approach to business
• Risk-based approach to fraud prevention
• Risk appetite
• Residual risk equation

Risk assessment
• Principles for an effective fraud risk assessment
• Risk rating by applying your institution’s policies and tools
• Risk rating by applying third-party tools

Review
• Review questions

3. Fraud Typologies and Red Flags
Introduction
• Emily’s job hunt
• What would you do?
• Feedback
• Learning objectives

Cyber-enabled fraud
• Cyber-enabled crime
• Social engineering in cybercrime
• Hacking and unauthorized access
• Business email compromise

Financial institution fraud
• New account opening fraud
• Loan fraud
• Loan fraud (case example: Paycheck Protection Program scheme)

Payment fraud
• Credit and debit card fraud
• Wire fraud and mail fraud
• Invoice fraud
• Check fraud

Consumer fraud
• Identify fraud
• Elder fraud
• Ponzi schemes and pyramid schemes
• Securities fraud
• Advance-fee fraud

Procurement and contract fraud
• Procurement and contract fraud
Internal fraud
• Internal fraud
• Internal fraud (case example: Rita Crundwell)

Review
• Review questions

4. Controlling Fraud
Introduction
• Big city identity fraud
• What would you do?
• Feedback
• Learning objectives

Developing an anti-fraud program
• Anti-fraud compliance program
• FRAML
• Common gaps in fraud prevention

Preventive controls
• KYC is intended to manage risk
• Controlling risk
• Three lines of defense
• Dual controls
• Know your employee and vendor
• Raising awareness about fraud

Detective controls
• Transaction monitoring is intended to manage risk
• Transaction monitoring for fraud
• Enhanced techniques for transaction monitoring

Whistleblowing program
Next steps
• Duty to report
• Suspicious activity escalation process
• What is a suspicious activity report?
• Maintaining an account after unusual activity
• Remedies for victims of financial crime

Review
• Review questions

5. Conclusion