Successful Fraud Protection

Fraud comes from many sources, some internal and some external to your company. Regardless of the source, when you have assets on the move in the form of payables and receivables, your company is more vulnerable to fraud. Awareness of the tactics and scams that fraudsters commonly use and a thoughtful control environment around your payments processes make the best fraud deterrents.

How prepared is your company?

The prevalence and increasing incidence of fraud puts  your company at risk every day, yet nearly half of  organizations have not performed a general fraud risk  assessment, and more than half have not assessed their  cyber-attack vulnerabilities in the last 2 years.[1] “Helping  our clients reduce the risk of a financial loss due to fraud  is paramount,” explains Michael Maza, Head of SunTrust  Treasury & Payment Solutions. “Our solutions incorporate preventive measures such as account monitoring, identification of suspicious items and alerts to the client to make decisions on questionable transactions. The best defense is always a great offense, so we strive to detect potential fraud before it occurs.” 

You can put in place many simple procedures to help protect your company from fraud. The SunTrust Resource Center Fraud Protection section provides additional helpful information in the fight against fraud.

From a payment perspective, increasing the penetration of electronic payments and collections can be an asset in combating check fraud. “Many CFOs realize that they can mitigate paper payment risks as well as electronic  fraud with a series of basic controls, such as automatic  reconciliation of accounts, blocks and filters on ACH  payments or instituting UPIC (Universal Payment  Identification Code),” emphasizes Katie Saez, Head of  Sales for Treasury & Payment Solutions at SunTrust.

Using technology to your advantage

More advanced technology brings an efficiency boost to payments and financial processes; however, those improvements come at the price of increased risk of attack by fraudsters. This is the double-edged sword of technology: no matter how many improvements are made, there will always be fraud criminals out there ready to try to beat your systems with newly-engineered attacks.  As new technologies and systems are deployed, their weaknesses haven’t been mapped and defensive strategies have yet to be devised. It is precisely for this reason that it is vital that companies partner with their accounting, audit or advisory professional services firm to assess new technologies for their impact on fraud risks. 

Fighting fraud needs a combination of process and technological solutions. The first step involves staff education about the importance of fraud detection and prevention. According to David Sawyer, a Certified Fraud Examiner and Managing Director at Sawyer & Co., “Many organizations don’t train managers or employees to understand why rules are put in place. Sometimes employees will override policies and procedures that were put in place for a reason that they don’t understand.”  Workers often just want to get the job done and may see protective procedures as barriers. One-time “workarounds” to circumvent these barriers can, over time, become business as usual, providing weaknesses for fraud criminals to exploit.

Managers are responsible for addressing internal fraud by setting up the controls and designing fraud training.  Responsibility extends equally to employees who must follow fraud prevention procedures and be on the lookout for signs of fraud. “Internal controls have to be embraced, not only from the board room, but they have to extend all the way down to the mail room,” says Sawyer.

The second step in thwarting fraud reduces opportunity by separating duties, reconciling accounts daily and using positive pay or reverse positive pay services for all paper checks. Don’t neglect the “frenemies” threat either. Pay close attention to vendor on-boarding and compliance to ensure fraud protection controls are in place within vendor organizations. Your strategic and operational partners should have business practices that mirror yours; monitor technology connections and data access; and use strong security defenses. 

Accept and make more payments electronically as one means to reduce vulnerabilities from human touches.  Innovative solutions such as Virtual Cards, which remove the need for a physical card by providing the payee with a unique secure token to access payment, improve the likelihood of more secure payments. Adding restrictions and controls to electronic debits from your accounts also helps create a more secure environment for payments.  The SunTrust Resource Center Fraud Protection section provides additional strategies to prevent and detect fraud.

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Pulling Fraud out of the Shadows, Global Economic Crime and Fraud Survey 2018, PricewaterhouseCoopers (PwC)

2 2019 AFP Payments Fraud and Control Survey Report, Association for Financial Professionals (AFP)

3 Report to the Nations on Occupational Fraud and Abuse Global Study, Association of Certified Fraud Examiners (ACFE), 2018