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Fraud investigation Source: Olivier Le Moal/Shutterstock.

With the incidences and dollar amounts of internal fraud at credit unions continuing to increase, efforts to detect and deter fraud should be an enterprise-wide effort at your credit union. Too often this is thought of as a function of risk management and/or security. While that is obviously correct, the credit union’s program for deterrence and detection of fraud should involve all members of the board, executive management and virtually every employee of the credit union.

The development of an anti-fraud culture starts with the board of directors. The Board must develop a strict no tolerance policy for fraud or any type of dishonesty at the credit union. Frequently, these policies are titled “Ethics” or “Anti-Fraud” policies.  My preference is to fashion it as an “Ethics Policy” because, in addition to addressing theft or other criminal activity, the policy should engender honesty in every aspect of the credit union’s business and leave each person reviewing it with the clear understanding that deviations from the policy will not be tolerated. The policy needs to be communicated to executive management who must then be charged with communicating the policy to rank and file employees, as well as enforcing the policy according to its terms. Regular reports of those efforts should be communicated to the board of directors and supervisory committee. This policy should reviewed and acknowledged, in writing, annually by each employee (including executive management), as well as members of the supervisory committee and board of directors.

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