Financial Institutions' Execs ID Reasons for Employee Fraud

July 23, 2007 ( - More than half of financial institutions in a recent survey see organized crime, increased employee access to technology and poor hiring and screening practices as the main drivers of employee fraud.

A news release from Actimize, a provider of financial services industry risk management software, said more than three-quarters of respondents to its survey see employee fraud becoming more sophisticated while almost the same number (73%) rate the finance industry’s readiness to tackle the employee fraud problem as poor to somewhat acceptable.

Of those who knew, 50% said they have had a case of data theft in the last 12 months and their average largest employee fraud incident uncovered in the last five years was $874,961, while the single largest theft reported was $6 million, according to the news release.

The survey found that 85% of respondents have been affected by employee fraud and 65% see the threat getting worse. Additionally, more than 50% of respondents believe that half, or less, of employee fraud occurring at their institutions is being detected.

“Financial institutions have been aware of employee fraud and have been fighting the problem for years. However, with increased employee access to information and the growing sophistication of employee fraud, financial institutions are losing millions of dollars each year as insiders develop new and innovative fraud techniques to continue stealing from their organizations,” said Amir Orad, EVP of Actimize in the news release.

Additional survey findings include:

  • Nearly 70% of respondents said that government regulation or standards regarding employee access to customer accounts and data would hinder their company’s ability to detect or prevent employee fraud.
  • Respondents ranked data availability, general resource priorities and availability of tools as the top three biggest challenges in dealing with the threat of employee fraud.
  • Tying as the top internal challenge related to managing employee fraud were limited technology infrastructure and understanding the scope of the problem.

These findings are based on an Actimize-sponsored survey that was managed by Infosurv, an independent research company. This project included 40 detailed responses from financial institutions in the United States and United Kingdom, almost half coming from retail banks and over half from organizations with asset sizes over $30 billion.

More information about the company is at .