Criminal groups target banks with inside jobs

But sharing of information can help tackle staff crime, says FSA

Criminal groups are placing people inside banks and other financial services firms to learn how to circumvent their systems to commit fraud, the Financial Services Authority (FSA) has warned.

Speaking at a financial crime conference last week, FSA chairman Callum McCarthy told delegates that this is one of the issues that has prompted industry plans to share more information on fraud (Computing, 17 November).

'There is increasing evidence that organised criminal groups are placing their own people in financial services firms so that they can increase their knowledge of firms' systems and controls and thus learn how to circumvent them to commit their frauds,' he said.

Following on from the financial services industry's successful collaboration on launching the nationwide chip-and-PIN programme, its trade body Apacs is now working on two pilot programmes to setup online sites for sharing fraud information between banks.

One project will focus on sharing data about staff that have been linked to fraudulent activities, while the other will share information about the beneficiaries of fraudulent funds.

Work on both is at a very early stage as banks try to assess if they can meet the necessary data protection criteria, says Apacs.

'We're going to proceed cautiously, because at every step of the way we need to be mindful of the legalities of sharing data,' said a spokeswoman for the organisation.

'It's at the conversation stage, rather than the implementation stage, but it's come off the wish list. Once banks have assessed the feasibility of being involved, then it will go the point of putting up the database,' she said.

McCarthy says links need to be made between the work the FSA does, the work individual firms do and the work of law enforcement, but such links raise issues for government too.

'The work on staff fraud has highlighted concerns about whether data protection rules make data sharing unnecessarily difficult, and we will be involved in seeking a resolution to the problem,' he said.

LloydsTSB head of group fraud and intelligence Ken Farrow says banks are all in this together.

'We're all aware of crime as a problem, also terrorism. It's not going to go away. We need to focus on tightening up in every area of our banking applications,' he said.