Fraud in the banking system of Ukraine: ways to combat taking into account foreign experience
Keywords:
financial institution, crime, control, security, information, legal regulation, Ukraine.
Abstract
The article aims to identify effective ways to combat bank fraud in Ukraine. Using the method of systematic analysis of theoretical experience, practical measures and international legislation in the field of combating banking fraud, the main factors influencing the bank fraud level are identified: financial instability of the banking institution, lack of information about the client's credit history, poor internal control, low level of corporate governance, lack of a standard procedure for customers verification, lack of a unified register of bank employees, imperfect legal regulators and a banking control system. The study allowed to identify the characteristics of an effective banking fraud combating system: a clear definition of the legal framework, regulation subjects and objects, strict and guaranteed liability for violations of laws, cooperation of structural units and regulatory authorities at the domestic and international level, state control of financial monitoring. As a result of the study, it was concluded that the successful experience of developed countries, comprehensive implementation of measures to combat bank fraud (at the legislative, bank management and technological level) will not only reduce the level of bank fraud, but also corruption, money laundering and terrorist financing rate.
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References
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Bhasin, M. (2007). The Bank Internal Auditor as Fraud Buster. The ICFAI Journal of Audit Practice, 4(1). Retrieved from https://management.nirmauni.ac.in/wp-content/uploads/sites/24/2020/11/06.-Bank-Internal-Auditor-as-Fraud-Buster.pdf.
Bhasin, M. (2016). Frauds in the Banking Sector: Experience of a Developing Country. Asian Journal of Social Sciences and Management Studies, 3, 1-9.
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Buchko, I.E. (2013). Scoring as a method of reducing the bank's credit risk. Bulletin of the University of Banking of the National Bank of Ukraine. 2 (17), 178-182. (In Ukrainian)
Buell, S.W. (2011). What Is Securities Fraud? Duke Law Journal, 61, 511-581.
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Gullkvist, B., & Jokipii, A. (2013). Perceived importance of red flags across fraud types. Critical Perspectives on Accounting, 24, 44-61.
Haugen, S. & Selin, J.R.(1999). Identifying and controlling computer crime and employee fraud. Journal: Industrial Management & Data Systems, 99 (8), 340-344.
Kingsley, A. (2012). Frauds In Nigerian Banks: Nature, Deep-Seated Causes. Aftermaths And Probable Remedies, 3, 279-290.
Klochko, A.M. (2015). Fraud in obtaining a bank loan. Law and society. Dnepropetrovsk. 3, 158-163. (In Ukrainian)
KPMG (2013). KPMG International. KPMG Malaysia Fraud, Bribery and Corruption Survey. Recovered from https://www.academia.edu/7301608/KPMG_Malaysia_Fraud_Bribery_and_Corruption_Survey_2013
KPMG (2019). KPMG International. Global study on banking fraud. Multilateral threat of fraud: are banks ready to meet the challenge with dignity? (In Ukrainian). Recovered from https://assets.kpmg/content/dam/kpmg/en/pdf/2020/01/Global-Banking-Fraud-Survey.pdf
Krishevich, O.V. (2012). Methods of fraud in the banking sector: criminal law aspect. Legal Bulletin, 2 (23), 112-116. (In Ukrainian). Retrieved from http://nbuv.gov.ua/UJRN/Npnau_2012_2_25
Kriushenko, L.I. (2015). On the classification of methods of fraud in the banking sector. Bulletin of VNKarazin Kharkiv National University Law Series, 20, 261-266. (In Ukrainian). Retrieved from http://nbuv.gov.ua/UJRN/VKhIPR_2015_20_64
Kuznetsova, N.V. (2016a). Analysis of financial risks using SAS-data processing technologies. Electrical and computer systems, 22 (98), 267-271. (In Ukrainian)
Kuznetsova, N.V. (2016b). Scoring technologies for assessing the risks of fraud in banking. Information technology and security: mat. int. scientific-practical conf. ITB-2016. (Kiev, December 1, 2016) Kiev: IPRI NAS of Ukraine, 43-47. (In Ukrainian)
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Lexology (2004). Digital Economy Law. Retrieved from https://www.lexology.com/commentary/e-commerce/france/franklin/france-implements-eu-e-commerce-directive.
Lomnicka, E. (2008). Investor Protection in Securities Markets. In: Peter Cane/Joanne Conaghan (eds.), The New Oxford Companion to Law. Online edition. Oxford: Oxford University Press.
Merchant Savvy (2020). Global Payment Fraud Statistics, Trends & Forecasts. Recovered from https://www.merchantsavvy.co.uk/payment-fraud-statistics/
Mordvinkin, A. (2014). Credit fraud of legal entities. Retrieved from http://amordvinkin.ru/ index.php/publishing/kreditovanie-malogo-biznesa-prochee/115-mosh4. (In Ukrainian)
Nafchi, A.R., & Dastgir, M. (2019). Identification and Ranking of Risk Factors Affecting the Probability of Bank Fraud (Case Study, Isfahan Province Resalat Bank). International journal of Business Management, 4 (4), 50-64. Retrieved from https://sciarena.com/storage/models/article/ytY9ZR3319jjwQinFW80jofuso2QAZdAAjuZfidgzAE9hRFa1oHlYoiZjv1A/identification-and-ranking-of-risk-factors-affecting-the-probability-of-bank-fraud-case-study-isfa.pdf
Narain, B. (1992). Survival analysis and the credit granting decision. Credit Scoring and Credit Control. 1, 1-2.
Neil, F., & Roehrkasse, A. (2013). All the Incentives Were Wrong: Opportunism and the Financial Crisis. Conference paper. American Sociological Association Annual Meeting, New York.
Nets Fraud & Dispute services (2019). European Fraud Report – Payments Industry Challenges. Recovered from www.nets.eu/solutions/fraud-and-dispute-services.
Okpara, G.C. (2009) Bank failure and persistent distress in Nigeria: A Discriminant Analysis. Nigeria Journal of Economic and Financial Research, 2(1).
Omar, N.B., Faizal, H., & Din, M. (2010). Fraud Diamond Risk Indicator. An Assessment of Its Importance and Usage. In International Conference on Science and Social Research, (CSSR 2010) (pp. 607-612). IEEE, 27 May 2011.
Pivovarov, V.V. (2013). On the issue of latency of corporate crime in the banking sector. Scientific Bulletin of Kherson State University. Jurisprudence, 3, 104-106. (In Ukrainian)
Popov, K.L. (2015). Uncriticality and risk as factors in increasing victimization in fraud. Bulletin of the Academy of Advocacy of Ukraine, 12, 1, 95-104. (In Ukrainian)
PwC. (2020). Worldwide research economic crimes and fraud. Retrieved from https://www.pwc.com/ua/uk/survey/2020/economic-crime-survey.html
Rodchenko, S.S., & Zhivko, Z.B. (2020). Financial fraud in the banking sector: essence, types and current state. Scientific Bulletin of Uzhhorod National University, 31, 104-108. (In Ukrainian)
Sanusia, Z.M., Ramelib, M. Nor, F., & Isab, Y.M. (2015). Fraud Schemes in the Banking Institutions: Prevention Measures to Avoid Severe Financial Loss. Procedia Economics and Finance, 28, 107-113.
Sharma, B.R. (2004). Bank Frauds- Prevention & Detection. Universal law Publishing Co. Pvt .Ltd. Retrieved from https://www.goodreads.com/book/show/6258657-bank-frauds
Siddiqi, N. (2006). Credit Risk Scorecards: Developing and Implementing Intelligent Credit Scoring. John Wiley & Sons, Hoboken.
The Crown Prosecution Service (CPS). (2020). The Fraud Act of 2006. Retrieved from https://www.cps.gov.uk/legal-guidance/fraud-act-2006.
Vitvitskiy, S.S., Kurakin, O.N., Pokataev, P.S., Skriabin, O.M., & Sanakoiev, D.B. (2021a). Formation of a new paradigm of anti-money laundering: The experience of Ukraine. Problems and Perspectives in Management, 19, 1, 354-363.
Vitvitskiy, S.S., Kurakin, O.N., Pokataev, P.S., Skriabin, O.M., & Sanakoiev, D.B. (2021b). Peculiarities of cybercrime investigation in the banking sector of Ukraine: review and analysis. Banks and Bank Systems, 16(1), 69-80. doi: 10.21511/bbs.16(1).2021.07
Wells, J.T. (2008). Directory of prevention and detection of corporate fraud. Translation with еnglish M.S. Sukhanova, Yu.Yu. Simirskaya, V.L. Artemova. Moscow: Maroseika. (in Russian)
Agwu, E. (2012) Generations X and Y‟s adoption of internet and internet banking in Nigeria: a qualitative study. International Journal of Online Marketing, 2 (4), 68-81.
Agwu, E.M. (2013) Cyber criminals on the internet super highways: A technical investigation of different shades and colours within the Nigerian cyber space. International Journal of Online Marketing, 3(2), 56-74.
Agwu, E.M. (2014). An investigative analysis of factors influencing E-business adoption and maintenance of commercial websites in Nigeria. Basic Research Journal of Business Management and Accounts. 3 (1), 05-16. Retrieved from https://www.academia.edu/9331760/Agwu_E_M_2014_An_investigative_analysis_of_factors_influencing_E_business_adoption_and_maintenance_of_commercial_websites_in_Nigeria_Basic_Research_Journal_of_Business_Management_and_Accounts_ISSN_2315_6899_Vol_3_1_pp_05_16_January_2014_Available_online_http_www_basicresearchjournals_org.
Association of Certified Fraud Examiners (ACFE). (2014). Report to the Nation on Occupational Fraud and Abuse. Austin, Texas: ACFE. Retrieved from https://www.acfe.com/rttn/docs/2014-report-to-nations.pdf.
Baranovsky, O.I. (2014). Philosophy of security: monograph: in 2 vols. Kiev: UBS NBU, 2: Security of financial institutions. (In Ukrainian)
Beasley, M.S. (1996). An Empirical Analysis of the Relation between the Board of Director Composition and Financial Statement Fraud. The Accounting Review, 71, 443-465.
Bhasin, M. (2007). The Bank Internal Auditor as Fraud Buster. The ICFAI Journal of Audit Practice, 4(1). Retrieved from https://management.nirmauni.ac.in/wp-content/uploads/sites/24/2020/11/06.-Bank-Internal-Auditor-as-Fraud-Buster.pdf.
Bhasin, M. (2016). Frauds in the Banking Sector: Experience of a Developing Country. Asian Journal of Social Sciences and Management Studies, 3, 1-9.
BNP Paribas (2018). World Payments Report. Recovered from https://worldpaymentsreport.com/wp-content/uploads/sites/5/2018/10/World-Payments-Report-2018.pdf
Buchko, I.E. (2013). Scoring as a method of reducing the bank's credit risk. Bulletin of the University of Banking of the National Bank of Ukraine. 2 (17), 178-182. (In Ukrainian)
Buell, S.W. (2011). What Is Securities Fraud? Duke Law Journal, 61, 511-581.
Cherniavskyi, S.S. (2010). Financial fraud: methodological principles of investigation: a monograph. Kiev: High-TechPress. (In Ukrainian). Retrieved from https://ua1lib.org/book/3065660/89faff?id=3065660&secret=89faff.
Chernyshov, G.M. (2014). On the question of defining financial fraud. Scientific Bulletin of Uzhhorod National University. Right, 26, 230-234. Retrieved from http://nbuv.gov.ua/UJRN/nvuzhpr_2014_26_61. (In Ukrainian)
Di Vizio, F. (2017). Money laundering from a criminal and administrative perspective. Definitions of recycling. Bank of Italy. Retrieved from https://uif.bancaditalia.it/pubblicazioni/quaderni/2017/quaderni-8-2017/quaderni_8_2017.pdf.
Dzhuzha, O., Golosnichenko, D., & Chernyavsky, S. (2000). Crimes in the field of credit, financial and banking activities: criminological analysis. Law of Ukraine, 11, 36. (In Ukrainian)
European Banking Federation. (2002). Money Laundering: Legislation. National Measures. Retrieved from https://www.ebf.eu/wp-content/uploads/2017/01/Money_Laundering_Nov02-2004-01934-02-E.pdf
Fraud Digest. (2017). Ukrainian Interbank Association of Members of EMA Payment Systems. Recovered from https://www.ema.com.ua/news/fraud-digest-28-09-2017/. (In Ukrainian)
Green, S.P. (2007). Lying, Cheating, and Stealing: A Moral Theory of White-Collar Crime. New York: Oxford University Press.
Gullkvist, B., & Jokipii, A. (2013). Perceived importance of red flags across fraud types. Critical Perspectives on Accounting, 24, 44-61.
Haugen, S. & Selin, J.R.(1999). Identifying and controlling computer crime and employee fraud. Journal: Industrial Management & Data Systems, 99 (8), 340-344.
Kingsley, A. (2012). Frauds In Nigerian Banks: Nature, Deep-Seated Causes. Aftermaths And Probable Remedies, 3, 279-290.
Klochko, A.M. (2015). Fraud in obtaining a bank loan. Law and society. Dnepropetrovsk. 3, 158-163. (In Ukrainian)
KPMG (2013). KPMG International. KPMG Malaysia Fraud, Bribery and Corruption Survey. Recovered from https://www.academia.edu/7301608/KPMG_Malaysia_Fraud_Bribery_and_Corruption_Survey_2013
KPMG (2019). KPMG International. Global study on banking fraud. Multilateral threat of fraud: are banks ready to meet the challenge with dignity? (In Ukrainian). Recovered from https://assets.kpmg/content/dam/kpmg/en/pdf/2020/01/Global-Banking-Fraud-Survey.pdf
Krishevich, O.V. (2012). Methods of fraud in the banking sector: criminal law aspect. Legal Bulletin, 2 (23), 112-116. (In Ukrainian). Retrieved from http://nbuv.gov.ua/UJRN/Npnau_2012_2_25
Kriushenko, L.I. (2015). On the classification of methods of fraud in the banking sector. Bulletin of VNKarazin Kharkiv National University Law Series, 20, 261-266. (In Ukrainian). Retrieved from http://nbuv.gov.ua/UJRN/VKhIPR_2015_20_64
Kuznetsova, N.V. (2016a). Analysis of financial risks using SAS-data processing technologies. Electrical and computer systems, 22 (98), 267-271. (In Ukrainian)
Kuznetsova, N.V. (2016b). Scoring technologies for assessing the risks of fraud in banking. Information technology and security: mat. int. scientific-practical conf. ITB-2016. (Kiev, December 1, 2016) Kiev: IPRI NAS of Ukraine, 43-47. (In Ukrainian)
Law 10/2010. The Law on the Certain Measures against Money Laundering. Official State Gazette, 28 April, 2010. Retrieved from https://www.legislationline.org/download/id/8496/file/Spain_law_preventing_terrorism_financing_2010_am2013_en.pdf.
Lexology (2004). Digital Economy Law. Retrieved from https://www.lexology.com/commentary/e-commerce/france/franklin/france-implements-eu-e-commerce-directive.
Lomnicka, E. (2008). Investor Protection in Securities Markets. In: Peter Cane/Joanne Conaghan (eds.), The New Oxford Companion to Law. Online edition. Oxford: Oxford University Press.
Merchant Savvy (2020). Global Payment Fraud Statistics, Trends & Forecasts. Recovered from https://www.merchantsavvy.co.uk/payment-fraud-statistics/
Mordvinkin, A. (2014). Credit fraud of legal entities. Retrieved from http://amordvinkin.ru/ index.php/publishing/kreditovanie-malogo-biznesa-prochee/115-mosh4. (In Ukrainian)
Nafchi, A.R., & Dastgir, M. (2019). Identification and Ranking of Risk Factors Affecting the Probability of Bank Fraud (Case Study, Isfahan Province Resalat Bank). International journal of Business Management, 4 (4), 50-64. Retrieved from https://sciarena.com/storage/models/article/ytY9ZR3319jjwQinFW80jofuso2QAZdAAjuZfidgzAE9hRFa1oHlYoiZjv1A/identification-and-ranking-of-risk-factors-affecting-the-probability-of-bank-fraud-case-study-isfa.pdf
Narain, B. (1992). Survival analysis and the credit granting decision. Credit Scoring and Credit Control. 1, 1-2.
Neil, F., & Roehrkasse, A. (2013). All the Incentives Were Wrong: Opportunism and the Financial Crisis. Conference paper. American Sociological Association Annual Meeting, New York.
Nets Fraud & Dispute services (2019). European Fraud Report – Payments Industry Challenges. Recovered from www.nets.eu/solutions/fraud-and-dispute-services.
Okpara, G.C. (2009) Bank failure and persistent distress in Nigeria: A Discriminant Analysis. Nigeria Journal of Economic and Financial Research, 2(1).
Omar, N.B., Faizal, H., & Din, M. (2010). Fraud Diamond Risk Indicator. An Assessment of Its Importance and Usage. In International Conference on Science and Social Research, (CSSR 2010) (pp. 607-612). IEEE, 27 May 2011.
Pivovarov, V.V. (2013). On the issue of latency of corporate crime in the banking sector. Scientific Bulletin of Kherson State University. Jurisprudence, 3, 104-106. (In Ukrainian)
Popov, K.L. (2015). Uncriticality and risk as factors in increasing victimization in fraud. Bulletin of the Academy of Advocacy of Ukraine, 12, 1, 95-104. (In Ukrainian)
PwC. (2020). Worldwide research economic crimes and fraud. Retrieved from https://www.pwc.com/ua/uk/survey/2020/economic-crime-survey.html
Rodchenko, S.S., & Zhivko, Z.B. (2020). Financial fraud in the banking sector: essence, types and current state. Scientific Bulletin of Uzhhorod National University, 31, 104-108. (In Ukrainian)
Sanusia, Z.M., Ramelib, M. Nor, F., & Isab, Y.M. (2015). Fraud Schemes in the Banking Institutions: Prevention Measures to Avoid Severe Financial Loss. Procedia Economics and Finance, 28, 107-113.
Sharma, B.R. (2004). Bank Frauds- Prevention & Detection. Universal law Publishing Co. Pvt .Ltd. Retrieved from https://www.goodreads.com/book/show/6258657-bank-frauds
Siddiqi, N. (2006). Credit Risk Scorecards: Developing and Implementing Intelligent Credit Scoring. John Wiley & Sons, Hoboken.
The Crown Prosecution Service (CPS). (2020). The Fraud Act of 2006. Retrieved from https://www.cps.gov.uk/legal-guidance/fraud-act-2006.
Vitvitskiy, S.S., Kurakin, O.N., Pokataev, P.S., Skriabin, O.M., & Sanakoiev, D.B. (2021a). Formation of a new paradigm of anti-money laundering: The experience of Ukraine. Problems and Perspectives in Management, 19, 1, 354-363.
Vitvitskiy, S.S., Kurakin, O.N., Pokataev, P.S., Skriabin, O.M., & Sanakoiev, D.B. (2021b). Peculiarities of cybercrime investigation in the banking sector of Ukraine: review and analysis. Banks and Bank Systems, 16(1), 69-80. doi: 10.21511/bbs.16(1).2021.07
Wells, J.T. (2008). Directory of prevention and detection of corporate fraud. Translation with еnglish M.S. Sukhanova, Yu.Yu. Simirskaya, V.L. Artemova. Moscow: Maroseika. (in Russian)
Published
2021-10-29
How to Cite
Kyrychenko, O. V., Soldatenko, O. A., Gorokhovska, O. V., Voloshyna, M. O., & Maksymova, L. O. (2021). Fraud in the banking system of Ukraine: ways to combat taking into account foreign experience. Amazonia Investiga, 10(45), 208-220. https://doi.org/10.34069/AI/2021.45.09.21
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