Fraudulent Activities that Impact the Financial Sector and Beyond: Takeaways from 2023 IBA Meeting

Attorney Laura Alms recently attended the annual business meeting and holiday breakfast for the Chicago Area Chapter of the Illinois Bankers Association. Now she’s sharing her top takeaways!

1. Special agent in charge Doug Zloto of the U.S. Secret Service
2. Team leader Kevin Freeman of the U.S. Postal Inspection Service
3. Intelligence analyst Michael Young of the Federal Bureau of Investigation

Here are three of Laura's top takeaways:

1. Actions taken at the local level matter. When a bank is the victim of fraud, it may seem that Suspicious Activity Reports (SAR) are filed and statements are taken, but that nothing ever comes of the investigation. The panel made clear that this couldn't be further from the truth. These are actually some of the most valuable resources in an investigation. Investigations often take years and involve large webs of thefts, but first-hand accounts of tellers and SARs by bank branches often provide key details to assist investigators in cracking a case.
2. Bad actors are becoming more sophisticated and their fraud schemes are evolving with emerging technologies, such as Artificial Intelligence (AI). Through the use of AI, criminals are able to eliminate many of the red flags that once alerted a potential victim to fraud. For example, AI is used to correct errors in spelling, grammar, and syntax to make a communication sound more authentic and is used to imitate voices in order to sound identical to a real person. As the criminals become more sophisticated, it is important for financial institutions to keep abreast of the latest fraud schemes and the technologies being used.
3. Develop relationships with federal law enforcement. The panel stressed that each and every banking professional should have contacts with one or more federal law enforcement agencies that they can call directly. Involving federal law enforcement contacts immediately after a fraud is uncovered decreases the chance that evidence will be spoiled or leads will go stale. Federal agencies also network and share information and their involvement in a fraud perpetrated on a local bank may actually be part of a much larger fraud investigation.