According to the FinCEN Alert report, financial institutions have filed over 350,000 Suspicious Activity Reports (SARs) to FinCEN in 2021, a 23% increase over the number of SARs filed in the previous year. Financial institutions filed over 680,000 SARs related to check fraud in 2021, nearly double what they filed the previous year.
This is a cause for concern for banks.
Criminals often use counterfeiting, check washing, and mail-related thefts to steal checks, withdraw money or make purchases.
Mail-related thefts have become extremely common these days. The USPIS (United States Postal Service) has received 299,020 complaints of mail theft from March 2020 to February 2021, with an increase of 161 percent.
Let’s see how these mail-related check frauds arise.
Typologies of Mail Theft-Related Check Fraud and Associated Money Laundering
- Fraudsters steal checks from the U.S. Mail.
- They alter or “wash” the checks, replacing payee information with their own or fraudulent identities, and increase the dollar amount on the check, sometimes by thousands.
- Third-party fraudsters may copy, print, and buy washed checks on the dark web and encrypted social media platforms.
- They sometimes counterfeit victim checks using routing and account information from the original stolen check.
- Criminals cash or deposit checks in person at financial institutions, through ATMs, or via a remote deposit into accounts they control. Or, they might rely on money mules and pre-existing accounts to deposit the checks.
- Once deposited, the illicit actors often rapidly withdraw the funds through ATMs or wire them to other accounts they control.
- Criminals may further exploit victims by using personally identifiable information found in the stolen mail for future fraud schemes.
To avoid mail-related check fraud, FinCen suggests looking out for these red flags!
Financial Red Flags Relating to Mail Theft-Related Check Fraud
- Large withdrawals on a customer’s account via check to a new payee, which is not typical of their usual behavior.
- The customer reports a check or checks stolen from the mail and deposited into an unknown account.
- The customer reports the intended recipient did not receive a check they mailed.
- Checks used to withdraw funds from a customer’s account are noticeably different from those typically used by the bank and for known transactions.
- A customer with no history of check deposits suddenly makes new check deposits followed by withdrawals or fund transfers.
- Abnormal deposits of checks, often electronic, followed by rapid withdrawal or transfer of funds.
- Suspect checks show signs of overwritten handwriting, indicating fraud.
- Pandemic-related fraud may be indicative of suspicious activity on suspect accounts.
- A new customer opens an account only used for depositing checks, followed by frequent withdrawals or fund transfers.
- A non-customer gave a suspicious or potentially indicative explanation when attempting to cash large checks in person, which could be linked to money mule activity.
While mail theft is the most common way of check fraud, it’s not the only one.
Check fraud with the help of Telegram — a messaging service — has made it easier for criminals to recruit, train, organize, and execute schemes, according to Maria Noriega, a senior cyber-intelligence analyst at Q6 Cyber.
Use of Telegram To Conduct Check Frauds
Criminals reportedly increased the use of the encrypted messaging app Telegram to recruit “walkers” in their check fraud schemes.
Walkers are people who deposit fake or altered checks into their own accounts, and then withdraw the funds before the bank realizes the fraud. This scheme has resulted in an 84% increase in check fraud at America’s big banks, according to industry experts.
For this reason, many banks have increased the number of staff who monitor customer accounts for unusual activity. However, hiring more staff leads to increased expenses for banks, and is not a feasible option.
Banks need a more cost-effective way to deal with check fraud, and the best way to do it is by using an advanced check fraud detection and investigation system like ScanWriter.
Introduction to ScanWriter
ScanWriter is the perfect solution for banks looking to prevent money laundering, where checks are used as a means to move money or defraud the system. Its powerful OCR technology quickly and accurately converts financial data from paper documents into digital formats, reducing the risk of manual errors and fraudulent activity.
With ScanWriter, businesses can easily track their financial data, ensuring that every transaction is accounted for and verified. Its customizable features also allow businesses to implement additional security measures to protect against fraudulent activity.
If you’re looking for a reliable way to prevent bank fraud, ScanWriter is the answer.
Let’s discuss eight ways how ScanWriter can help banks fight check fraud.
8 Ways ScanWriter is Helping Banks Fight Check Fraud
Capture Data Accurately from 1,000 Checks in Less than An Hour
ScanWriter can help you capture data from any document, picture, or PDF and organize it in an excel sheet.
Users can extract information from any type of form, including bank records, credit cards, check images, and brokerage documents. As a result, 90% of the time spent manually checking checks is saved, and data preparation is streamlined and efficient.
ScanWriter processes the front and back of the check and can capture data from up to 12 checks per page, taking about one to two seconds per page.
ScanWriter processes a thousand check images in less than an hour, and the software can handle cases with 500 to a hundred thousand check images.
Read Hand-Written Checks in Cursive or Block Handwriting
ScanWriter can recognize hand-written bank documents, whether cursive or block. It can recognize different computer layouts and fonts and capture information automatically.
Still, if a check has some information that’s not clearly visible, you can always zoom in on the image within the software just as you would have used a magnifying glass to read the less legible handwriting.
Process Checks in Bulk
ScanWriter can handle cases with 500 to 100,000 check images. It can capture data from 1-24 check images per page. You just need to direct the software to the folder containing check images; ScanWriter will capture, organize and sort the data to assist you with automated data entry. You also don’t need to flip between different applications while processing checks in bulk.
ScanWriter’s dual-screen data preview displays the check image on one side and the data on the other. Side-by-side preview makes it easy for bookkeepers to check for accuracy without compromising data integrity and time.
Get Captured Data from Checks Well Organized in the Excel Sheet
ScanWriter can capture and normalize data, such as dates and payees, and recognize memo fields, routing numbers, and MICR codes.
If you want to reconcile data, you can click on the data cell, and ScanWriter will highlight that particular data in the check image on the other side.
Using this software, you can intelligently normalize payees and detect handwriting and print combinations.
In fact, when ScanWriter organizes the data captured from checks in an Excel sheet, it also stores images of checks in the Excel sheet.
Create Rules to Normalize Data
ScanWriter can normalize and organize data in a table format in Excel. You can create rules to display the data in formats of your choice. So that you don’t need to go and manually change every non-standard occurrence.
For instance:
- You can create a normalization rule to display the amount in familiar formats to suit your needs; for e.g., you may want the amount to be displayed as 5,000.00 instead of 5000.
- You can also create a normalization rule to tell how names written in different ways actually belong to the same entity. For e.g., ‘Vine & Associates,’ ‘Vine & Associates LLC,’ and ‘VINE AND ASSOCIATES LLC’ belong to the same entity.
- You can also create rules to see payer and payee names in all caps for better readability.
Get One-Click Source Verification
The dual-screen data preview feature of ScanWriter allows you to view the check image and captured data simultaneously, making it easier to ensure that the data is accurately captured.
This feature also eliminates the need to flip between different applications or print out the check images, making the process faster and more efficient.
Additionally, the captured data can be easily edited or corrected on the same screen, further reducing the chance of errors.
ScanWriter helps you verify the source of information in just a click using the Source Link option.
If you right-click on any cell in the spreadsheet, the PDF file where the check originated comes up with the exact part highlighted. This makes it easy for you to verify the accuracy of the information, especially if you’re reviewing the work of a colleague.
Alternatively, you can directly embed the check image into the spreadsheet if you don’t want to use the Source Link option.
Identify Transactions where Withdrawal Happens Soon After the Deposit
ScanWriter can help you identify suspicious credits, which may seem normal at first but can lead to potential fraud.
Suppose you want to integrate the deposit slips with the bank statement, and you see a recorded deposit of $1,000. But, soon you realize that there was a $12,000 check deposit involved where $11,000 cash was taken out before the deposit hit the bank.
Based on this level of detail, investigators can find patterns and identify potential fraud. You can even file a SAR report—if needed—to conduct further investigation.
Also read: How to Prepare a Compelling Narrative for Your SAR Report?
Get Automated Visualizations like “Flow of Funds”, and “Benford’s Law”
ScanWriter integrates with Microsoft Power BI and offers data validation to detect errors, such as a comma instead of a period.
With a library of pre-built visualization models, including options ‘All Transactions’ for an overall view, ‘Flow of Funds’ for analyzing bank statements, and ‘SAR Analysis,’ you can easily detect and investigate suspicious activity. Moreover, it can be used without extensive knowledge of Power BI, making it user-friendly for beginners.
ScanWriter also creates automated visualizations based on Benford’s Law highlighting potential fraud, making it easier for fraud examiners to identify suspicious transactions quickly.
It’s easy to use and does not require any complex Excel formulas, making it accessible to even those with limited data analysis skills.
It provides a powerful tool for banks to detect fraudulent activity in their accounts, helping them to reduce losses and protect their customers from financial harm.
Check Fraud Investigation: ScanWriter – Your Dependable Companion
The truth is: More workforce is not always a cost-effective solution to meet the increased workload. However, advanced technological solutions can reduce the need for human labor, thereby saving monetary resources.
More workforce also doesn’t always mean no mistakes. As humans, we’re bound to make errors, but with the help of a promising tool, we can minimize these errors and reduce the workload.
ScanWriter offers several benefits, making it a promising solution to speed up check fraud investigations.
It can capture and organize captured data into an Excel sheet, making it easy to view and sort information by payer, payee, amount, date, memo, MICR code, etc.
Its ability to create rules to normalize data and perform one-click source verification is also highly assistive while reconciling data captured from checks and other financial documents.
ScanWriter’s integration with Microsoft Power BI provides a library of pre-built visualization models that can be used to detect suspicious activities and trace assets like ‘Flow of Funds,’ ‘Benford’s Law,’ etc.
Its powerful data capture and analytics capabilities make it an ideal tool for banks and other financial institutions looking to detect and prevent check fraud without hiring more employees.