Q1: What is the definition of bank fraud?

● A1: Bank fraud involves using deceptive and often illegal methods to steal
money, property, or assets owned by a financial institution. It can also include
impersonating a financial institution or its representative to steal from clients.

Q2: What is the legal definition of bank fraud in the US?

● A2: In the US, bank fraud involves obtaining money, funds, credits, assets,
securities, or property owned by a financial institution or belonging to its clients
through false pretenses, presentations, or promises. It often includes "schemes"
or "artifices" to conceal the fraudulent activity.

Q3: Name some common types of bank fraud.

● A3: Common types of bank fraud include Account Takeover Fraud, New Account
Fraud, Wire Transfer Fraud, ATM Fraud, Bill Discounting Fraud, Debit and Credit
Card Fraud, Identity Theft, Bank Draft and Check Fraud, and Accounting Fraud.

Q4: What is Account Takeover Fraud?

● A4: Account Takeover (ATO) fraud involves fraudsters gaining control of a bank
customer's account through various means, such as social engineering, hacking,
or purchasing credentials. They can then perform unauthorized transactions or
open new accounts.

Q5: What is New Account Fraud, and why is it significant in money laundering?

● A5: New Account Fraud involves opening a new bank account under a false
identity, often using impersonation or synthetic identities. It is significant in
money laundering as it can create seemingly legitimate channels for moving ill-
gotten money.

Q6: How does Wire Transfer Fraud work, and why are these transactions challenging to
reverse?

● A6: Wire Transfer Fraud involves sending legitimate-looking requests to transfer

money by impersonating trusted parties. These transactions are challenging to
reverse because they often involve deceiving victims into transferring funds
urgently, and by the time fraud is detected, the money may be unrecoverable.

Q7: What is the role of AI in bank fraud detection and prevention?

 ● A7: Artificial Intelligence (AI) enhances bank fraud detection by processing large
volumes of data in real-time, adapting to evolving threats, and providing greater
accuracy compared to rules-based engines. It reduces false positives and can
detect fraudulent activity effectively.

Q8: How does machine learning contribute to fraud prevention in banking?

● A8: Machine learning allows fraud systems to "learn" from behavioral data,
consortium data, and other sources, enabling banks to navigate the complex
fraud landscape and deliver proactive protection to customers and their assets.

Q9: Explain what biometric authentication is and why it's a popular security measure in
banking.

● A9: Biometric authentication uses unique physical characteristics like voice,

facial features, or fingerprints to verify identity. It's popular in banking because
it's difficult to spoof, making it a strong security measure. Biometric data cannot
be easily stolen, forgotten, or lost.

Q10: What are Two-Factor Authentication (2FA) and Multi-Factor Authentication (MFA),
and why are they important in bank fraud prevention?

● A10: 2FA and MFA require customers to provide multiple pieces of evidence to
verify their identity, adding layers of security. They are important in bank fraud
prevention when combined with other technologies to create a comprehensive
security strategy.

Q11: How can advanced analytics help in bank fraud detection and prevention?

● A11: Advanced analytics, when applied to customer and transaction data, can
offer a comprehensive view of the business, enhance operational efficiency, and
engage in predictive fraud detection. It enables banks to identify patterns
indicative of fraud.

Q12: Name some strategies for fighting fraud in banking.

● A12: Strategies include conducting regular fraud awareness training, being

vigilant for internal fraud, creating a database of known threats, educating
banking customers about fraud prevention, monitoring transactions in real-time,
and implementing multi-layered security systems.

Q13: Why is it important to educate bank employees about recognizing potential fraud?
 ● A13: Bank employees are often targets of cybercriminals, making them
vulnerable to fraud attempts. Educating employees about recognizing potential
fraud helps protect both the employees and the institution.

Q14: What is the significance of creating a threat database in bank fraud prevention?

● A14: Creating a threat database allows banks to be aware of active and emerging
threats. It helps in collecting fraud data from various sources to gain insights into
the fraud landscape and make informed risk decisions.

Q15: How does real-time transaction monitoring aid in fraud detection?

● A15: Real-time transaction monitoring involves developing behavioral profiles for

customers and flagging anomalous transactions against these profiles. It helps
detect potentially fraudulent activity as it happens.

Q16: Explain the concept of multi-layered security systems in bank fraud prevention.

● A16: Multi-layered security systems combine administrative, physical, and

technical controls to reduce risk. Administrative controls include policies and
procedures, physical controls involve tangible security measures, and technical
controls use technology to reduce risk exposure.

Q17: Provide examples of notable bank fraud cases mentioned in the active notes.

● A17: Notable bank fraud cases include the Enron scandal, Bernie Madoff's Ponzi
scheme, and the 1Malaysia Development Berhad (1MDB) scandal.

These flashcards cover various aspects of bank fraud, including its definition, types,
prevention technologies, detection strategies, and notable cases.