Due to the rise of unemployment after the pandemic, some businesses and individuals have become desperate to misrepresent their finances. DIRO’s report reveals a sharp rise in the usage of altered bank statements from 15% to 29% in September 2020, with a staggering 25% of applications going undetected. The 2022 Breach Report Data reveals that stolen or compromised credentials ended up costing $150,000 more than the average cost of a data breach.
As fraudsters become more adept, they are taking advantage of advanced technologies to produce bank statements that are nearly indistinguishable from authentic ones. Furthermore, manual verification methods are unable to detect highly sophisticated fake bank statements. A quick internet search allows fraudsters with next to no skill to use unethical services that produce these fake bank statements to secure money illegitimately. Therefore, it has become imperative to identify forged bank statements in order to minimize the occurrence of fraud. Banks and lenders have the ability to detect fraudulent bank statements by searching for blatant mistakes, such as typos or inconsistencies in font styles, unusual formatting, text misalignment with the rest of the document, or any evidence of file tampering. By adopting automation and leveraging data analytics, lenders can effectively speed up fraud detection at a higher level of accuracy.
Key Signs of Fraudulent Bank Statements
Fraudsters are becoming increasingly sophisticated in their techniques and are using advanced technologies such as graphics processing and deep fake engineering to manipulate information and conceal their activities. However, if a lender spots one of these indicators, they can suggest file tampering on bank statements:
- Modified dates: The dates on the statement may have been changed or altered.
- Changes in the format: The layout and format of the statement may appear different from previous statements.
- Missing or added pages: The number of pages on the statement may differ from what is expected, or pages may have been added or removed.
- Inconsistent font: The font used on the statement may vary throughout, indicating that different software was used to create or modify the document.
- Incomplete information: Information typically included on a bank statement, such as transaction details or balance amounts, may be missing or incomplete.
How Can Lenders Identify Fake Bank Statements?
The process of identifying altered bank statements can be demanding and time-consuming, especially when handling a significant volume of statements or records. Processing bank statements is necessary to detect fraud, as it aids in identifying instances of fake identities, forged documents, and fraudulent information on these statements. When scrutinizing bank statements and other financial documents, financial institutions and other organizations have two options, “manual” and “automated.”
Identifying fake bank statements typically involves manual steps such as looking for inconsistencies or irregularities in the information presented, cross-referencing the statement with other documents provided by the borrower, checking for authenticity by contacting the bank, and verifying that the statement matches the bank’s records.
Additionally, fraud detection software or services can be used to detect fabricated or manipulated bank statements. Data extraction and analysis tools automatically extract data from statements and analyze them for anomalies. Fraud detection software can also be utilized to scan for patterns or characteristics commonly associated with fake statements. These methods are designed to streamline the process of identifying fake statements and reduce the potential for errors or oversights that may occur during manual reviews.
Manual Document Review
The manual processing of bank statements involves the manual extraction of information from PDF documents or physical bank statements and entering the data into a system by hand. Due to the possibility of human error and the increasing sophistication of fraud, relying solely on manual fraud detection methods is not a dependable approach to detecting fake bank statements. While the human eye can detect some instances of fraud, regrettably, the manual methods used by bank employees to verify documents are unable to meet the standards as fraudsters are employing more advanced techniques that are not easily detectable by manual means.
Pros of Manual Review
- Familiar and established method of identifying modified bank statements.
- The cost of implementing manual document reviews is often lower compared to utilizing specialized software or services.
- Bank employees are trained to identify potential issues or inconsistencies in bank statements, which can help prevent fraudulent activities.
Cons of Manual Review
- A time-consuming process that involves entering data, correcting errors, and validating the information by hand.
- Can cause delays in transaction processing due to the slower speed of manual entry and review.
- The process may also require re-corrections if data entries are incorrect.
- There is a maximum limit on the number of statements that can be processed within a given timeframe, resulting in a bottleneck in transaction processing.
- Error rate associated with manual processing can be as high as 30%, which can lead to significant problems in record-keeping and reconciliation.
- Converting bank statements to different formats is not possible.
Automated Document Review
Automated bank statement processing eliminates the need for labor-intensive tasks such as physical document scanning and manual data entry from tables printed on pages, resulting in cost savings for the organization. By utilizing the right automation software integrated with fraud detection, lenders can analyze bank statements with a high degree of accuracy within seconds, generating clear and concise results that organizations can use to make informed decisions about an applicant.
Pros of Automated Review
- Significantly reduce the time required for data processing and analysis, resulting in faster turnaround times for loan approvals.
- Automated document reviews are scalable, meaning they can handle large volumes of documents without affecting quality or accuracy.
- Scan and analyze documents with a high degree of accuracy and consistency, reducing the chances of human error.
Cons of Automated Review
- Automated document reviews may not be able to detect all types of fraud, particularly those that are new or sophisticated.
- The use of automated systems requires an initial investment in software and hardware, which can be expensive.
- The accuracy and reliability of automated systems may depend on the quality of the input data, which may vary depending on the source.
Spot Fake Bank Statements With MonJa’s Automation Platform
As technology advances, the use of fraudulent bank statements to obtain loans or credit is becoming more prevalent, posing a significant challenge for lenders. MonJa helps financial institutions and lenders detect fake bank statements and streamline commercial lending (C&I, CRE, auto, SBA, and other SMB loans). If you are looking for ways to automate loan underwriting, reviews, and renewals at your institution, MonJa’s Smart Scan technology, which is integrated with fraud detection, will be a great fit for your organization. With MonJa, lenders can seamlessly automate the statement spreading for loan underwriting and review, freeing up the credit team’s time to better serve customers.