Preventive Vigilance
What the exam tests
Preventive Vigilance tests whether you can design controls that stop fraud before it happens, rather than only punishing staff afterwards.
Core rules
- Preventive vigilance is forward-looking: systems improvement, segregation of duties, job rotation, mandatory leave, surprise checks, concurrent audit, whistleblower mechanisms and vendor due diligence.
- CVC guidance and bank vigilance policy distinguish preventive vigilance from punitive action; the aim is to reduce opportunity, not merely to punish.
- Fraud risk assessment, early warning signals, red-flagged accounts, staff accountability policy and customer awareness are preventive tools.
- Vigilance Awareness Week is observed around 31 October–6 November, but the examinable point is the control culture behind it, not the calendar.
Worked example
A branch manager and loan officer repeatedly use the same valuer, sanction loans quickly and ignore inconsistent KYC. The red flags are collusion, concentration and control override. Preventive action includes rotating staff, surprise verification of collateral, independent valuation review, EWS monitoring and a protected whistleblower channel. If the bank only initiates disciplinary action after the fraud surfaces, preventive vigilance has failed.
Traps
Vigilance is not only punishment. EWS is not a post-facto report. Staff accountability cannot replace system controls. Confidentiality of vigilance proceedings must be maintained, but it is not a reason to skip root-cause analysis.