2.1.1 Fraud
| Status: In-Force |
In 1993, the accounting firm KPMG conducted a fraud survey of six countries-the United States, Canada, Australia, the Netherlands, Ireland, and Bermuda. This study found that, on average, approximately 80% of all frauds committed were perpetrated by employees, 60% by non-managerial personnel and 20% by managers. In all of the countries surveyed, misappropriation of cash was the most common form of employee fraud. This would appear to fit the situation currently being encountered by Saudi banks, since most employee fraud losses have come from the theft of cash and or travelers checks from. branches and ATMs. Consistent with international trends Fraud currently represents the single largest area of operational loss within the Kingdom's banking system. During the past five years, approximately 85% of all operational losses sustained by banks in the Kingdom involved employee dishonesty.
Recovery of funds lost due to fraud (particularly cash) is, at best, difficult and in many cases simply impossible. This highlights the fact that programs designed to prevent fraud are significantly more effective and less expensive than are attempts to recover the funds once stolen.