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Internal Fraud Investigations

If we have reason to suspect that one of our bank staff members may be involved in internal fraud, who should begin the internal investigation – human resources, internal audit, legal or security?

by: Banker's Hotline

Many financial institutions struggle with this question. We agree with the Deloitte Center for Corporate Governance, and the Association of Certified Fraud Examiners recommendations that companies establish a formal Fraud Response Management program. Deloitte points out that “The overarching goal of a fraud response program is to protect the organization from the potential economic, reputational and legal risks associated with a fraud allegation.”
The fraud response program, which should be tailored to fit your bank’s size and unique culture should consider:

  • The assignment of responsibility and accountability for handling allegations of fraud and misconduct
  • The methods and procedures by which allegations are investigated
  • Documentation and evidentiary procedures
  • Decision making authority
  • Reporting of investigation results within the bank, and
  • Regulatory reporting responsibilities

Planning ahead by developing and implementing an effective fraud response management program – as part of an overall anti-fraud program – is essential and will help your bank avoid significant risks.

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

First published on 08/29/2021

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