FRAUDS IN

TRANSACTIONS
AND CONTROLS TO
PREVENT IT
OVERVVIEW
A fraudulent transaction is the unauthorized use of
an individual's accounts or payment information.
Fraudulent transactions can result in the victim's loss
of funds, personal property, or personal information.
TYPES OF FRAUDS
1. Cheque fraud refers to a category of criminal acts
that involve making the unlawful use of cheques in
order to illegally acquire or borrow funds that do not
exist within the account balance or account-holder's
legal ownership.
• Counterfeiting of cheques
• *Fake cheque
• *fabricated cheque
• *cloned cheque
• Forgery & Alteration on Cheques

• 2. Money laundering

• Money laundering is the process by which large amounts of

illegally obtained money (from drug trafficking, terrorist activity or
other serious crimes) is given the appearance of having originated
from a legitimate source.
• 3. FRADULENT LOAN APPLICATION
• .These take a number of forms varying from
individuals using false information to hide a credit
history filled with financial problems and unpaid
loans to corporations using accounting fraud to
overstate profits in order to make a risky loan
appear to be a sound investment for the bank.

CONTROLS
• 1.Use a system of checks and balances to ensure no one
person has control over all parts of a financial transaction.
--Require purchases, payroll, and disbursements to be
authorized by a designated person
--Require supervisors to approve employees’ time sheets
before payroll is prepared.
2.Reconcile agency bank accounts every month.
--Require the reconciliation to be completed by an
independent person who doesn’t have bookkeeping
responsibilities or check signing responsibilities or require
supervisory review of the reconciliation.
• 3.Protect checks against fraudulent use
--Prohibit writing checks payable to cash.
• Deface and retain voided checks.
• Store blank checks in a locked drawer or cabinet, and limit access
to the checks.
• --Mark invoices “Paid” with the check number when checks are
issued
4.Protect cash and check collections
--Ensure that all cash and checks received are promptly recorded
and deposited in the form originally received.
• Issue receipts for cash, using a pre-numbered receipt book.
• Conduct unannounced cash counts.
• --Centralize cash receipts whenever possible.
• 5.Prepare all fiscal policies and procedures in writing and
obtain Board of Directors approval
--cash disbursements
•
--attendance and leave
•
--expense and travel reimbursements