Episode Details

www.marktreichel.com

https://www.linkedin.com/in/mark-treichel/

Hello, this is Samantha Shares. This episode covers 

A portion of The O C C's Semiannual risk perspective Special topic 

Increase fraud targeting the federal banking system. 

The following is an audio version of that topic. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A. 

And now the letter. 

The special topic focuses on the increasing trend in external fraud activity targeting consumers and the federal banking system. The frequency of both traditional and novel, more sophisticated fraud activities targeting customers and banks continues to increase. Banks should maintain sound fraud risk management practices through prudent controls and appropriate fraud monitoring capabilities to identify, investigate, mitigate, and report fraudulent activity. Banks can also support their customers by providing educational information about trending fraud activities and ways to protect themselves. 

Criminals continue to exploit traditional payment methods through check and wire transfer schemes. The Financial Crimes Enforcement Network (F I N C E N) September 2024 "Financial Trend Analysis" analyzed threat patterns and trend information on mail theft-related check fraud incidents over a six-month period in mid-2023. The report noted that financial institutions filed 15,417 B S A reports on mail theft-related check fraud, 13,618 (88 percent) of which were filed by banks. It described several types of check fraud such as bad actors altering stolen check payees and amounts, using the stolen check to create counterfeit checks, fraudulently signing the check, and selling the check or its identifying information on dark web marketplaces or encrypted social media platforms. Furthermore, the O C C's Customer Assistance Group observed an increase in the number of check fraud-related complaints submitted by consumers over the past year. 

Federal banking system-related wire transfer complaints that consumers submitted to the Customer Assistance Group reflect an increasing trend. For wire transfer schemes, the fraudster often poses as a trusted business, government agency, or even a bank employee, fabricating scenarios that require immediate action and convincing, with urgency, victims to wire money to a fraudster's account. In most cases, once the wire transfer is complete, the funds cannot be retrieved. 

While artificial intelligence (A I) can enhance fraud risk management capabilities, reduce costs, and improve efficiency, this and other new technologies are also being used to enable increasingly more sophisticated and frequent fraud tactics. Fraudsters could use A I to implement sophisticated frauds by digitally altering voices, biometric systems, or images (also known as "deepfakes"), or to facilitate social engineering schemes, identity theft, and impersonation of a trusted business or government agency. For example, deepfakes through voice replication have been used to perpetrate fraud by tricking voice biometric systems or by convincing a victim they are dealing with someone they know and trust, such as a family member. 

Increasing product and service digitization can also heighten fraud risk, including fraud targeting peer-to-peer (P2P) and other fast payment platforms. P2P payment platforms can provide enhanced capabilities and convenience to consu