This article focuses on the fraud management in various financial institutions. It also presents the existing models to identify the fraud along with the new software model Fraud Management System (FMS). When it was announced that the telecom giant WorldCom was being investigated by the SEC, it sent shock waves throughout the world. The Wall Street darling was accused of inflating its earnings to the $11 bn tune. The fraud, one of the biggest in corporate America, saw the shareholders lose $180 bn with 20,000 workers being laid off. And many similar statements can be made in the retinue.
Incidents like these are hackneyed; the USA is just one of the many nations exposed to high amount of fraud risk. Improper management and adapting experimental models (new ones not tested) may lead to frauds. We have seen incidents where banks talk about frauds, and plan for better strategies to tackle these frauds. For most of them, fraud is equivalent to a lie, both to the same degree. But in the legal sense lie is a very small dimension of fraud. A salesman, for example, may lie about his product, but as long as he is truthful about the product he is not guilty of fraud (but of course from the manufacturers point of view). Fraud in his case arises, if he misinterprets the product and devaluates it in front of a potential customer. According to the Webster's dictionary, a fraud is a deception made for personal gain. Banks are not the only financial institutions affected with frauds. Fraud exists in many industries including banking, investments and telecommunications.
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