What is Financial Fraud?

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Financial fraud can be described as any intentional act of deception involving financial transactions for the purpose of profit. In all nations of the world, financial fraud is a criminal offense and is also a civil law violation. Financial fraud ranges from complicated financial transactions by ‘white collar criminals’ to extensive cyber crimes conducted by hackers and identity thieves and may include credit card fraud and illegal investment schemes.

In recent years, financial fraud has proven not to be the monopoly of the dregs of society. Highly educated persons and individuals of repute have found themselves mixed up or initiating several acts of financial fraud. For example, an investment broker may take advantage of the credibility which his status as a professional investor gives him to lure unsuspecting clients into illegitimate businesses. Some of these businesses would even have the complete semblance of a legitimate business even having authentic-looking bond documentations and sometimes, some persons may become victims of the investor brokers’ unscrupulousness.

Fraudsters can contact their victim through several methods, including face-to-face transactions, phone calls, emails, and/or SMS. The difficulty of checking the true identity and legitimacy of individuals and companies and the ease with which fraudsters can mimic and clone legitimate websites through phishing scams makes the field of internet fraud one of the fastest growing areas of financial fraud.

Another method of financial fraud which is increasingly popular is get-rich-quick schemes. These are schemes which offer an incredible return on investment with considerable ease and at little risk. If the offer looks too good to be true, you should be wary and make an extra effort to verify the validity of the promised returns. Most of these get-rich-quick schemes de-emphasize the importance of working to make a profit and also require little effort and time to get returns from them.

Money laundering still ranks high amongst the most popular forms of financial fraud, and it usually involves setting up an investment or a charity organization which stands as a front for passing illegal monies through. One major reason persons carry out laundering is either to hide illegal money or to avoid paying tax on money. Money laundering is a very complicated type of financial fraud and involves different types of financial institutions, multiple financial transactions, use of intermediaries, use of various financial instruments and other kinds of value-storing assets. The range of activities which are carried out by financial fraudsters are several, and it is necessary that one keeps updated with financial updates and scams and schemes by fraudsters.