Bank fraud

Bank fraud is the use of potentially illegal means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently posing as a bank or other financial institution. In many instances, bank fraud is a criminal offence.

While the specific elements of particular banking fraud laws vary depending on jurisdictions, the term bank fraud applies to actions that employ a scheme or artifice, as opposed to bank robbery or theft. For this reason, bank fraud is sometimes considered a white-collar crime.

Widespread fraud in the USA savings and loan institutions during the 1980s is complicating government attempts to rescue thousands of institutions declared insolvent. In 1990 it was estimated that 60% of the savings and loans institutions seized in order to protect investors were the victims of fraud.

In 1998, the head of the World Bank established a special internal fraud team and hired a team of external investigators to examine allegations of corruption and embezzlement against bank officials in Washington. Among the projects under scrutiny were World Bank-funded schemes in Russia, Japan and Indonesia, countries at the centre of the international financial crisis.