60% of bank crimes are....

60% of bank crimes are inside jobs: Banker

The national banking association claims 60 percent of banking fraud in the country involved bank employees who work with outsiders to carry out the crimes.

Indonesian Banks Association (Perbanas) chairman Sigit Pramono said in Jakarta on Thursday that the crimes mostly occurred in priority banking services, often with the help of a syndicate.

“Stealing money from banks nowadays is done through new methods with the involvement of bank employees who often cooperate with a syndicate,” he said.

Sigit claimed the initiative to perpetrate the crime came mostly from syndicates, which used bank employees to carry out their crimes.

Syndicates often took up to three years to build a relationship with bank employees to be able to persuade them to perpetrate the fraud, Sigit said at a seminar on banking fraud.

Bank employees often falsified signatures or used blank checks already signed by trusting customers to embezzle client funds, he added.

“Sometimes the relationship between bankers and clients are beyond personal, so customers trust their bankers too much. For customers’ convenience, bankers sometimes sacrifice security and break standard operating procedures,” Sigit said.

Other banking fraud methods include manipulating loan disbursements — most prevalent in small-scale rural banks — and falsifying letter of credit, Sunarsip, the chief economist at Indonesia Economic Intelligence, said.

Bank Indonesia acknowledged the presence of weaknesses in controls in priority banking services. The central bank recently ordered 23 banks to stop signing up new priority banking clients for a month starting early this month due to flaws found in wealth management practices.

At the same seminar, BI deputy governor for banking supervision Halim Alamsyah said that if the crimes were perpetrated only by bank employees, the banks would have to compensate for financial losses suffered by customers due to the crimes.

“However, if the crime was carried out with the help of an outsider and a dispute occurs, banks must set up an escrow account in the amount of the embezzled money.

The funds can be cashed in with permission from Bank Indonesia after a court ruling or agreement by parties involved,” Halim said in his opening remarks at the seminar.

In a recent fraud case at Bank Mega, Rp 191 billion was stolen from the accounts of two clients, PT Elnusa and the Batubara regency administration. Bank Mega was ordered to compensate for the missing funds.

However, the money would first be kept in an escrow account until a court issues a verdict in the case.

The Financial Transactions Report and Analysis Centre (PPATK) and the police are currently probing embezzlement cases in the banking industry. They suspect the two cases at Bank Mega were carried out by the same syndicate.


Souces by: Esther Samboh, The Jakarta Post, Jakarta | Fri, 05/27/2011 8:00 AM