Fraud committed by external parties

Below are the details of the operational risks covered within this selected sub-risk category:

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Insurance fraud involving false or exaggerated claims

Risk Description: -

This involves any type of insurance fraud (e.g. vehicle, property) where the fraudster submits false or exaggerated claims. The incident related to claims are genuine incidents.


Organised insurance fraud

Risk Description: -

This involves cases where customers buy new insurance policy with intention of committing fraud. This may involve cases where: -



Ghost broking insurance fraud

Risk Description: -

This involves cases where insurer brokers use fraudulent means to sell insurance policies to customers. Examples of fraudulent means may include: -



Application fraud

Risk Description: -

This involves cases when a customer intentionally submits incorrect information during application for new products/services. This can apply to all banking and insurance products/services. Typical examples of such cases include: -



Vehicle conversion fraud

Risk Description: -

This involves cases when a customer sells a car even when the loan on the car is not fully repaid.
This also involves when a fraudster sells car owned by a customer without knowledge of the customer.


First party fraud

Risk Description: -

This involves cases where a customer successfully obtains products/services (e.g. credit cards, insurance) but they do not intend to pay for such products/services.


Insurance fraud involving staged events

Risk Description: -

This involves cases where an event is staged by one or more fraudsters with intention of making a fraudulent claim. Typical examples of such cases include: -



ATM fraud by obtaining card details through fraudulent means

Risk Description: -

This involves cases where fraudsters obtain details of debit or credit cards through fraudulent means and then utilise these details to withdraw cash from customer accounts: -

Examples of fraudulent means may include: -



Card not present fraud

Risk Description: -

This involves cases where fraudsters obtain details of debit or credit cards through fraudulent means and then utilizes these details to make unauthorised purchases.

Examples of fraudulent means may include: -



Counterfeit card fraud

Risk Description: -

This involves cases where fraudsters obtain details from the magnetic stripe of a genuine card through fraudulent means and then create a fake card using these details to commit fraud. Examples of fraudulent means may include:



Counterfeit cheque fraud

Risk Description: -

This involves cases where a fraudster uses counterfeit cheques printed on non-bank paper to look exactly like genuine cheques. Such counterfeit cheques are used to withdraw money or make fraudulent payments on genuine accounts.


Forged cheque fraud

Risk Description: -

This involves cases where a fraudster steals a genuine cheque and uses forged signature to withdraw money or make fraudulent payments on genuine accounts.


Fraudulently altered cheque fraud

Risk Description: -

This involves cases where a fraudster alters a genuine cheque, so the cheque is paid to fraudster's targeted account (e.g. alter the beneficiary name or amount of the cheque).


Online banking fraud using phishing techniques

Risk Description: -

This involves cases where a fraudster uses fraudulent means to secure personal information from online users without their knowledge or consent.

Examples of fraudulent means may include: -



Online banking fraud using malware software

Risk Description: -

This involves cases where a fraudster is able to install a malware software on customer PCs without their knowledge. Once installed, such malware software can capture user's bank account details and forward these details to the fraudster.


Online banking fraud using hacking techniques

Risk Description: -

This involves cases where a fraudster is able to hack into customer PCs and get access to customer's bank account details.


Phone banking fraud

Risk Description: -

This involves cases where a fraudster acquires customer's phone banking access details through fraudulent means and then uses such details to access customer's banking account and commit fraudulent transactions.
Examples of fraudulent means may involve: -



Collusion between vendors

Risk Description: -

Two or more vendors may collude with each other during a procurement process. Such collusion may result in firm paying higher prices for products and services or receiving lower quality of products and services. Collusion may take following forms: -



External parties exploiting weaknesses in business processes or IT Systems to extract fraudulent payments

Risk Description: -

External parties may exploit weaknesses in firm's business processes or IT Systems to extract fraudulent payments from the firms or pay for products or services not utilized by the firm. Example of such fraud may include: -



Investment fraud by external parties involving investment from the firm

Risk Description: -

Firm may invest funds with external parties, where such external parties create products and services to intentionally commit fraud. Examples of such fraudulent products and services may include: -



Firm's products/services are utilized for money laundering

Risk Description: -

Firm's products/services may be utilized by external parties for money laundering. External parties may include: -



Firm's products/services are utilized for committing investment fraud

Risk Description: -

Firm's products/services may be utilized by external parties for running investment fraud schemes. This may include share-sales fraud, land-banking fraud, unauthorised collective investment schemes, Ponzi schemes etc.