By John Tucker
The ACFE just released its 2026 Report to the Nations and regarding fraud hitting Financial Institutions, the data is a bit uncomfortable.
The Banking industry is once again the single most represented industry in the entire study with fraud hitting both sides of the ecosystem, which includes inside of your Branches and inside of the retail stores of your commercial clients. In this article, I’ll explore these data points further and offer insights into prospective solutions.
Inside Your Branches
The 2026 study included 439 Occupational Fraud cases in the Banking and Financial Services industry, which is more than any other industry cited. The median loss was $100,000 but average losses came in over $1,500,000. It took a median duration of 8 months before the fraud schemes were detected. Here’s the breakdown of where the fraud is originating from:
- 59% employee (staff) level
- 29% managers ($160,000 median losses)
- 9% executive level ($1.4 million median losses)
- Perpetrators with 10 or more years of tenure created the highest losses
A lot of the fraud schemes occur at the Teller line, your Vaults, and ATMs. For example:
- 17% of cases were cash on hand schemes
- 10% of cases were cash larceny
- 8% of cases were skimming
- 3% of cases were register disbursements
To shorten the 8 month median detection window, you can increase internal audits, management reviews, and encourage individuals to come forward with any tips or suspicious information.
To enhance these internal procedures, working with a Full Service Armored Carrier with an outsourced currency vault (with separate inventories for branch currency, ATM/ITM terminals, and commercial clients) could bring additional levels of control and custody management. Daily cash, exception, and variance reporting, coupled with ATM reconciliation, could give your internal audit and management review Teams more visibility to detect any suspicious activity in days or weeks, rather than the 8 month median detection period.
Inside Your Commercial Clients’ Retail Stores
The issue doesn’t stop at your Branches, as your cash intensive commercial clients are also dealing with rising internal fraud. For example, the Retail sector carries a $59,000 median loss per case, with a longer median detection period at 1 year. Similar cash schemes (skimming, cash larceny, and cash on hand theft) are still prevalent, with a top warning sign being employees who are in some sort of major financial difficulty.
As a result of the increasing internal theft and fraud, Retailers are installing Smart-Safes from Full Service Armored Carriers to provide more guardrails around physical Cash handling. Here’s how the process flows:
- A Smart-Safe is installed at the Retailer with each staff member receiving a Pin Code.
- With their Pin, they log in and make routine Cash Drops (let’s say once every 1 hour)
- Each staff member will receive a receipt print out of the monies fed in
- There will be streamlined report logs of all Safe activities (cash drops, etc.)
- An audit trail with time stamps will be created to detect any suspicious activities early
- The monies fed into the Smart-Safe hit the client’s bank account the next day
- This next day crediting process occurs via your FI providing daily provisional credit.
The physical cash inside the Smart-Safe becomes the property of the FI and your Armored Carrier will arrive to clear the contents of the Smart-Safe. Only the Armored Carrier will have access to the internal contents of the Smart-Safe to protect the internal Cash. Additional security cameras would then be installed at the Smart-Safe, register, and the path from the register to the Smart-Safe for additional visibility.
In Summary
The data shows that Fraud mitigation strategies should remain as a top priority for Financial Institutions going forward. This includes not just fraud from inside of your branches, but as a priority for solutions that you offer for your commercial clients. The additional guardrails suggested in this article are just a starting point.
With the rapid incorporation of AI, more security products, strategies, and solutions are being developed to help detect, prevent, mitigate and reduce the median fraud detection periods. As these solutions and strategies become more “smart” going forward, my prediction is that Fraud will become simpler to manage as we wrap up the 2020’s and head into the new 2030’s decade.
About the Author
John Tucker is Head of Business Development at Titan Armored and has 20 years of professional experience in Commercial Finance and Payments. Tucker is also an M.B.A. graduate and holder of three bachelor’s degrees in Accounting, Business Management, and Journalism. Connect with John Tucker on LinkedIn by clicking here: https://www.linkedin.com/in/johntucker99/