Assessing an individual’s financial condition is a crucial process in lending services. This step involves several relevant documents to ensure effective evaluation, such as proof of income, credit reports, and, most importantly, bank statements. This official record of a bank account provides indisputable evidence of a person’s ability to manage healthy cash flow. Unfortunately, many cases of fraudulent bank statements that contains suspicious transactions still exist even today.
Staying aware of current fraud patterns on bank transactions is important to protect lending businesses from potential scammers. The analysis process needs to be done cautiously and with a high level of concentration to preventively spot suspicious transactions.
In this article, let’s explore the warning signs of bank transactions you should watch for, and how you can effectively identify them.
Of all transactions, beware of these red flags:
- Mismatched balance
Carefully assess the correctness of the account balance over the months. Check if the closing balance in one month matches the starting balance in the next month. This step helps identify whether any intentional changes have been made to the bank statement. Additionally, review the total ending balance to anticipate any unusual amounts compared to other periods, which may require further confirmation.
- Inconsistent account number
In addition to verifying the validity of an account number against the owner’s name, checking the consistency of the account number on every page is also essential. Typically, bank statements submitted by applicants cover the last three months, resulting in tens or even hundreds of pages. Therefore, ensuring that every page has the same account number is a useful way to detect any hidden activities that may signal fraud and prevent them from going unnoticed.
- Non-standard admin charge
There are several administrative charges that require careful attention, such as the monthly fees and transfer fees to other banks. Each bank has its own standardized rates for these charges. If the administrative fee does not align with the standard rate, it could potentially indicate that the bank statements have been altered.
- Unusual ATM withdrawals
Be cautious of significantly larger or smaller ATM withdrawals compared to typical transactions. In addition to the amount, verify the location and timing of the withdrawals. These sudden financial changes over a short period can sometimes be flagged as suspicious activity.
- Spending on weekends
Especially for business bank statements, credit or debit activity occurring during off-hours can be viewed as suspicious. It is uncommon for businesses to make purchases on weekends, as most operate during regular weekday hours. While this may vary and depend on specific cases, it is something you should verify further.
Tracking down suspicious transactions manually is tiring, but what if you can automate that?
The most challenging part of evaluating bank statements is tracing transactions one by one while remaining focused to ensure that none are missed. However, this process can be very time-consuming and labor-intensive, especially when done manually.
Thanks to AI, this cutting-edge technology has introduced advanced methods for fraud prevention. By harnessing the power of AI, the Fintelite Bank Statement Analyzer can automatically identify deceptive transactions. Our analytics are now enhanced with a set of fraud metrics to provide you with a quick assessment of potential fraud, just by uploading the bank statement file. You can derive in-depth analyses of your customers’ financial conditions in minutes with our Bank Statement Analyzer.
Wait no more—get started with automated bank statement analysis today! Sign up here for a free trial. Consult with us about your needs and see how our Bank Statement Analyzer can simplify your workflow.
