What is financial institution fraud?

On Behalf of | Aug 29, 2020 | Fraud

Financial institution fraud is a federal crime. The FBI has resources allocated to investigate this type of crime. 

The FBI defines financial institution fraud as crimes that target credit unions, banks and other financial institutions the federal government insures. When this type of fraud occurs on a large scale, it can devastate an institution and make it have to close its doors. 

Identity theft

A large portion of the crimes that fall under financial institution fraud is those that involve identity theft. You may find that individuals will try to get access to customer account information or personal identifying information as they work their plan. When this happens and the information comes from the financial institution, it creates two criminal scenarios. One for the identity theft, and the other for the financial institution fraud. 

External and internal

Financial institution fraud can be external or internal. External fraud happens when the person committing the actions has no affiliation or connection to the financial institution. Internal fraud is when the person does have some type of connection, such as being an employee. 

External fraud scenarios may involve impersonating an account holder, using stolen checks and hacking emails. It also includes credit card scams. Internal fraud often includes gaining illegal access to accounts, selling customer information or misusing customer information. 


Technology use in banking and finance can be nice for customers and those working in the industry. However, technology also increases the ability of fraud. It makes accounts and internal operations more accessible to anyone with the right skills to bypass security measures.