Fraud and Other Financial Crime Typologies
Fraud families
Fraud is deception for financial gain and is a predicate offense for money laundering. Candidates should distinguish internal fraud (employee theft, expense, collusion) from external fraud (card, check, wire, identity theft, account takeover, phishing, business email compromise, authorized push payment scams, romance and investment fraud, Ponzi schemes, advance-fee fraud) and first-party fraud, where the customer fabricates identity or intent. Cyber-enabled variants are now the norm, and mule accounts are the bridge from fraud to laundering. Detection relies on red flags, anomaly analytics, device and behavioral monitoring, callbacks and chargeback data.
Traps
Watch for definitions: in authorized push payment fraud the victim personally authorizes the payment, so a chargeback may not be available. Business email compromise usually involves spoofed or compromised vendor email and a change of bank details, not a fake investment. A Ponzi scheme pays early investors with new money and collapses when inflows stop; a pyramid scheme relies on recruitment. Insider trading requires material non-public information and a duty or misappropriation. Tax evasion is illegal; tax avoidance is not.
Worked example
Accounts payable receives an email that appears to come from a known supplier, announcing new bank details. The right control is an independent callback to a previously verified number-never a number in the email. Rule of thumb: the fraud triangle-pressure, opportunity, rationalization-explains most internal fraud and guides control design.