CCUL Headlines: Compliance

Strengthen your fraud prevention program with these steps to fight internal fraud loss

Wednesday, April 11, 2018   (0 Comments)
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stop internal fraud loss

Fraud prevention programs are vital in today’s world with all of the internal and external fraud that is being reported on a daily basis. As stated in the NCUA’s Supervisory Priorities for 2018, examiners expect credit unions to establish “a strong system of internal controls and a comprehensive approach to managing fraud risk.” This is one of their main focuses this year so it’s crucial that credit unions have an adequate program in place with strong internal controls.

In a CUES article by Veronica Madsden, she highlights the following measures your credit union can take to ensure your internal controls are adequate and to deter fraud before it happens. These measures include: 

  • Requiring employees to sign a fraud policy annually;
  • Dual controls;
  • Computer access controls;
  • Reviews of file maintenance reports;
  • Cash counts;
  • Surprise audits; 
  • Measures that prevent employees from accessing family member accounts;
  • Performing background checks before hiring employees;
  • Conducting basic fraud awareness training;
  • Requiring mandatory vacations and having another employee perform the vacationing employee’s duties; and
  • Monitoring employees, including lifestyle and behavioral changes.

Also, understanding how fraudulent transactions occur can be helpful in preventing fraud in the first place. Some examples the article notes include employees changing dormant account statuses to “active,” and creating fictitious membership accounts under family members’ names. Reviewing membership cards, dormant accounts, and other areas with operational weaknesses on a regular basis can help to discover weaknesses before fraud can occur.

For additional information on internal controls, you may listen to CCUL Compliance’s January archive of the Quarterly Compliance Call which focuses on this very issue. The recording can be found here (login required). The department also hosts regional Compliance Roundtables throughout the year at a location near you. Contact CCUL Compliance at for more information.


Additional Resources

Quarterly Compliance Call, Archive: Internal Controls, January 18, 2018

Weekly Compliance Question Video, How to Improve Internal Controls, April 2018

CUESOn Compliance: Fraud Costs and Controls, March 2018

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