Changing Face of Financial Fraud: Steps Banks Can Take to Prevent, Mitigate, and Respond to an Attack

Proven Approaches to Mitigate. Financial Fraud Risks for Your Institution

Banks and credit unions of all sizes are in the crosshairs of fraudsters, as are all their customers. Financial fraud is the number one risk in our country today, and this threat environment is ever-growing. Our federal government calculated that Americans lost $10.3 billion in reported fraud losses in 2023. For every dollar lost by a customer, financial institutions in North America suffer well over $4.00 in their own direct and indirect damages, according to another recent study. It is almost not a question of “if,” but “when.” Each fraud event presents monetary, legal, statutory, and reputational risks. Understanding how to handle customer payment disputes now is an essential skill for bankers. It must not be forgotten that financial institutions are often themselves the targeted victims.

Education on this subject too often focuses on a technology offered for sale or some employee training exercise. However, this presentation
looks at the problem holistically and from a real-world banking operational sense. All have finite resources, so we will begin by discussing where the greatest risks lie and how the cyber threat environment is evolving. With the groundwork laid bare, we will then discuss the legal and regulatory rules of the road so that your fraud events can be efficiently addressed and resolved. This will include a discussion of the best practices to mitigate the risks, including the benefits and limitations of technology, training, processes, and contract provisions in the suite of prevention strategies for banks and credit unions. Lastly, should the nearly inevitable occur and a payment fraud situation be discovered, timely and informed response actions are required both to recover fraudulently transferred funds and to protect the all-important customer-bank relationship.

Please join Bill Repasky, an attorney with almost 40 years of experience as in-house bank counsel and in private practice assisting financial institutions in mitigating their exposure to financial fraud, as he offers step-by-step advice on how to avoid potential fraud losses and guidance for responding to both during and after an attack has taken place.

• Practical approaches for preparing for and mitigating financial fraud, whether your customers or your institution are the targeted victims.
• Current payment system risks and the continuously evolving fraud landscape.
• The rules and regulations governing payment systems.
• Examples of common fraud events impacting banks and credit unions.
• Strategies for reducing financial institution fraud risks, including staff training, current technology, process improvement, and contract safeguards.
• The most important remedial actions to recover fraudulently transferred funds.
• Best practices for protecting financial institutions from injuries resulting from financial fraud-related schemes.

Program Outline

Overview of Current Bank and Credit Union Financial Fraud Risks

• IC3 Report (Internet Crimes)
• Latest intelligence from the FBI regarding fraud schemes

Rules Applicable to Financial Institutions in Fraud
Situations

• What facts to gather in a payment fraud scenario
• Overview of transactional processes for electronic funds transfers
• Summary of the laws and regulations for analyzing financial fraud
• The UCC roadmap for payments
• Federal Regulations, Circulars, and Guidance
• Evolving case law treatment of payment disputes

Financial Fraud Mitigation Tools & Strategies

• Training
• Technology
• Processes
• Contract Strategies

Incident Response Strategies a/k/a What to Do When the Worst Happens

• Bank versus customer interactions
• Bank versus bank interactions
• Dealing with law enforcement, insurers, and other
  “stakeholders”