Skip to content

Employee Fraud Prevention Training

Answered by: 

I was recently tasked with developing an employee fraud prevention education program at my institution. Can you provide some insight into training practices that effectively mitigate internal theft?

Employee fraud is a challenging problem for banks and other businesses. The U.S. Chamber of Commerce estimates that 75 percent of all employees steal at least once and that half of those employees steal repeatedly. The perpetrators are often long-term employees with excellent work histories. The motivations for stealing are varied. The loss of loved ones, divorce, medical problems, addictions, greed or simply living beyond their means might provoke the most trusted people to risk careers and livelihood by stealing to meet their needs.

Fraud prevention training is one of the most effective strategies to defend against and minimize internal theft losses. The Association of Certified Fraud Examiners (ACFE) suggests that “By implementing an effective fraud awareness program, management can harness the efforts of the full staff in its anti-fraud activities and can significantly reduce the cost of fraud within the organization.”

The ACFE recommends that every employee in the company should be mandated to participate in a fraud awareness and prevention program. Managers and executives should receive targeted training designed to address fraud prevention and detection accountability connected to their positions of authority. Formal fraud prevention training should be part of the initial onboarding process for all new employees and supplemented with annual refresher training.

Training can be delivered through interactive, online self-study programs, recorded video sessions and live classroom settings. Of these options, the ACFE prefers instructor-driven, classroom settings because it allows the best interpersonal interaction and group feedback. Incorporating games and role-playing exercises into the curriculum can make the process more fun and productive. Classroom training designed around the realities and unique risks facing your organization, as opposed to generic anti-fraud messaging is the most effective.

Training Topics should include:

Defining Employee Fraud: Merely providing a legal definition of fraud is not good enough. An excellent fraud prevention program should differentiate the difference between acceptable and unacceptable behavior for all employees.

Describing How Employee Fraud Damages the Bank: The best programs clarify how employee dishonesty injures the organization through lost resources, decreased productivity, lowered morale and costs related to an investigation, litigation and prosecution – not to mention reputational damage.

Outlining How Fraud Hurts Employees: Losses from internal fraud can lead to decreased salaries, loss of bonuses, potential layoffs and trust issues affecting everyone. Personalizing the fallout can encourage employee commitment to fraud prevention and detection initiatives.

Identifying Who Perpetrates Fraud: Almost anyone experiencing a potent combination of pressure, adequate opportunity and the ability to rationalize a dishonest act can be at risk of committing fraud. As a result, fraud prevention training should strive to dispel preconceived ideas about criminals and teach employees to focus on identifying the warning signs of a fraudster.

Behavioral Red Flags: In addition to the personal challenges mentioned earlier, warning signs can include (a) financial difficulties, (b) control issues – unwillingness to share duties, (c) unusually close relationships with vendors or customers, (d) refusal to take vacation days, (e) past employment or legal problems, (f) chronic instability at home or in the office, (g) excessive work, peer or family pressures, and (h) unusually high levels of irritability, suspiciousness and defensiveness.

The Process for Reporting Fraud: It is imperative that employees know how to report suspicious activity. Tips by employees statistically uncover more fraudulent activities than any other means.

Punishment: Consequences for employee dishonesty, including termination and potential prosecution, needs to be defined explicitly in a way that everyone can understand and appreciate. Sharing stories about former transgressions can help to drive the point’s home.

Employee dishonesty becomes more attractive as people determine that the problems typically go undetected and punishment is lax and inconsistent. Fraud prevention training can dispel those notions and help to establish a culture of integrity.

This Q&A originally appeared in Bankers' Hotline. For more information, sample issues, and to subscribe, click here or email

First published on 10/31/2021

Filed under: 
Filed under security as: 

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics