“Organized Crime” and “Technology Too Accessible” Are The Top Reasons for Employee Fraud in Financial Institutions 

Actimize Survey Finds 77.5 Percent Believe That Employee Fraud is Becoming More Sophisticated While Fewer Than Half Have Proactive Automated Defenses

NEW YORK – July 23, 2007 – Actimize, the leading provider of transactional risk management software for the financial services industry, today announced the results of an Actimize peer-review survey examining employee fraud within financial services institutions. More than half of the financial institutions surveyed see organized crime, increased employee access to technology and poor hiring/screening practices as the main contributors to employee fraud.

More than three quarters of respondents see employee fraud becoming more sophisticated while almost the same number, 73 percent of respondents, rate the finance industry’s readiness to tackle the employee fraud problem as poor to somewhat acceptable. Of those who knew, 50 percent 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 $6,000,000. 

The survey found that 85 percent of respondents have been affected by employee fraud and 65 percent see the threat increasing. Additionally, more than 50 percent of respondents believe that half, or less, of employee fraud occurring at their institutions is being detected. Not surprisingly, fewer than half were using automated tools or more sophisticated data mining technology, like that offered by Actimize and other leading vendors. 

"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 and CMO of Actimize. "Proper employee fraud detection technology, infrastructure and tools need to be implemented by financial institutions, in addition to proactive screening and reactive investigations, to safeguard their assets and retain customer loyalty.”

In financial institutions, employee or insider fraud includes self-dealing, skimming, data-theft, embezzlement, collusion and any other fraud that originates from within the organization. These attacks can result in the theft of customer data as well as the theft of customer and bank funds. Respondents were asked to rate the level of preparedness within their organization to detect each of these activities. Levels of preparedness varied for each activity; however, respondents are least prepared to detect identity shielding, which happens when one employee spreads fraud across multiple users by signing in with other employees’ information, with 28 percent of respondents not ready to address it at all.

Additional findings from the survey include:

• Nearly 70 percent 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 USD. Fifty-five percent of the individuals that completed the survey specialized in fraud prevention/loss management and IT/Information Security, but the remainder was almost evenly spread across executive management, internal audit, corporate investigator, corporate security, compliance and risk management roles.

Actimize customers are growing more concerned by the threat of employee fraud. As a result, Actimize announced an Employee Fraud Prevention Solution last month, which has been successfully deployed by a top five retail bank in the U.S.  The solution monitors over 70 million employee activities per day, primarily at the call center and physical branches.

About Actimize

Mitigating transactional risk across enterprise silos, Actimize is a leading provider of software solutions for anti-money laundering, brokerage compliance and fraud prevention. Built on a patented, scalable and extensible analytics platform, Actimize solutions enable financial institutions to increase their insight into real-time customer behavior and improve risk and compliance performance. Six of the top 10 global banks and eight of the top 10 U.S. brokerages use Actimize solutions to process hundreds of millions of transactions a day. Actimize has offices in New York, Israel, London and Tokyo.  For more information, go to www.actimize.com.