Corporate Fraud and Internal Control + Software Demo: A Framework for Prevention

CHAPTER TWELVE

Industry-Related Fraud Opportunities

The man who is admired for the ingenuity of his larceny is almost always rediscovering some earlier form of fraud. The basic forms are all known, have all been practiced. The manners of capitalism improve. The morals may not.

—John Kenneth Galbraith, Canadian-American economist and author (1908–2006)

After studying this chapter, the reader should be able to:

• Identify those fraud opportunities that are specific to individual industries as well as government institutions.
• Design effective control mechanisms specific to those industry risks to achieve optimized control effectiveness at minimized cost.

In addition to defrauding opportunities and indicators that have been discussed earlier in this book, fraud opportunities exist within specific industries that can be treated individually to structure internal controls in order to achieve optimum fraud risk reduction for minimum cost.

BANKING FRAUD

Banking fraud is a scheme intended to defraud a financial institution or to obtain the assets under the control of a financial institution by means of fraud. Multiple variations of bank fraud occur, including:

• Money laundering
• Card fraud
• Check fraud
• Wire fraud
• Online fraud

Money Laundering

As mentioned in Chapter 2, money laundering involves the processing of a financial transaction representing the proceeds of unlawful activity in such ...