Parallel Banking Fraud – Welcome to MCB Islamic Bank Website

Beware of Parallel Banking Fraud

Definition

Parallel banking fraud involves conducting unauthorized or illegal banking transactions by staff that are intentionally hidden from the bank’s records or accounts. In this type of fraud, the illegal transaction is normally processed outside the bank’s official system, meaning it isn’t documented in the bank’s financial books

Signs to Watch For: Stay Alert

Stay alert if a staff member engages in any of the following behaviors:

Requests cash, upfront payments, or an open cash/personal name cheque from a customer for issuing any facility on behalf of the bank.
Accepts cash payments from customers and uses a personal name stamp on deposit slips instead of the bank’s official computerized stamp.
Demands blank, signed cheques or other sensitive documents from customers.
Promises unusually high profits on Term Deposit Certificates (TDRs) that exceed prevailing industry rates, which is often a red flag for fraud.
Instructs customers to keep special rate offers confidential and not share them with other bank employees.
Assures customers with vague statements like, “Don’t worry, just trust me.”
Handles cash transactions for customers outside the bank’s cash counter or outside branch premises.
Provides extraordinary or unauthorized favors to certain customers by compromising KYC protocols.

Create Customer Awareness

Never handover cash to anyone for any facility under any circumstances.
Carry out all cash deposit transactions at bank’s cash counters only.
Demands blank, signed cheques or other sensitive documents from customers.
Verify the bank’s computerized stamp or receipt on deposit slip before leaving the bank.
Regularly check and verify the cash deposit status in bank account after depositing cash.
Review bank statement and transaction status regularly.
Never accept help from stranger(s) to count cash.

Note: Parallel banking fraud may take many forms. However, the above information is limited to the fraud prevention, red flag and fraud trend awareness.