Countering internal and external fraud has long been a key management task. However, it gained specific management focus for banks with the Basle II accord and with prominent bank failures, such as Barings Bank, and high profile “rough trader” incidents such as Societé Générale, UBS or JPMorgan.

Threats from the fraud perspective range from mistakes done because of neglect and lack of knowledge or training to wilful damage, cheating, cover-ups of bets gone wrong, and other unlawful actions.

The impact on the industry is severe:

Average Cost of Fraud - 6% of annual revenues (The ACFE 2004 report)
60% of all frauds involves the organization's employees
More than 50% of frauds caused loss of $100,000+
65% of frauds are detected by tipping or by accident
The average scheme goes on for 18 months prior to detection

The impact of such actions may threaten the financial result, the bank's reputation and even its sheer existence.


The potential solutions are as plentiful as the potential threats and need to be individually designed and implemented according to the individual situation of the respective bank or financial institution.

They may range from awareness training to organisational measures such as re-assigned responsibilities or strict workflow management & control to specific monitoring software that allows identifying and tracking suspicious behaviour.

Although every solution will be different and specific to the individual institution, there are some common features:
Identification and prioritisation of requirements
Thorough analysis of the business environment, e.g. transaction networks in transactional banking, trade flows in securities trading, work flows, etc. in order to
>Identify enhancement options
>Lay the groundwork for effectively implementing and adjusting specific control and monitoring software
Organisational adjustments, especially regarding workflow management and control.
Implementation of specific software that monitors and analyses daily business (e.g. workflow steps, monetary transactions, trading operations) according to agreed business rules.

Our Approach

Our approach will be individual and tailored to the specific needs of the customer. However, it will consist of a combination of standard building blocks as they may apply to the individual project:

Requirements definition, analysis and prioritisation - This includes working with the bank to review regulatory and other requirements, define gaps and prioritise needs and related actions. If the bank already has a clear vision of its requirements, this step may be skipped.

Business process analysis and re-design - This includes reviewing the related work flows and, if beneficial, implementing systems to control and manage work flows and workloads. This will reduce the risk of staff members departing on unproven ground for processing business cases and transactions and keep management in control of what is happening regarding the day-to-day business. This allows the identification of critical situations as early as possible and helps to minimise any negative impact on the bank.

Implementation of specific transactional monitoring and logging software, e.g. Intellinx, allowing to track actions across various systems. This may be used to identify and track the root causes of specific results or transactions. Causes may be just incorrect handling or errors but may also lead to indications of wilful manipulation and fraud. Monitored transactions may also be analysed according to defined business rules to detect cases of e.g. money laundering attempts or insider trading. More

Effective Project Management ensuring project objectives are met on time and within budget.

print version

Related links


Oracle Financial Services (Mantas)

Best Practices for Anti Money Laundering (AML)

Oracle Financial Services Anti Money Laundering (AML)