CFCI Certified Financial Crimes Investigator - Exam Prep, Study Guide, Practice Questions & Verified Answers
Fraud "Any illegal acts characterized by deceit, concealment, or violation of trust. These
acts are not dependent upon the perpetrated by individuals and organizations to
obtain money, property, or services; to avoid payment or loss of services; or to
secure personal or business ad-vantage."
Main types of fraud Internal Fraud and External Fraud
Internal Fraud which involves the employees of the company against which the fraud is
perpetrated
External Fraud deceptive conduct by non-employees that
deprives the organization of value, and/or is undertaken for financial gain.
embezzlement theft or misappropriation of funds placed in one's trust or belonging to one's
employer.
financial fraud "cooking the books." This type of
fraud generally refers to falsely representing the financial condition of the company,
so as to inflate the value of stock, fraudulently boost executive bonuses, or
otherwise mislead shareholders, lenders, employees, investment analysts, or other
users of the information.
Skimming (cash larceny) Accounts receivable fraud, this
involves simply stealing cash before it enters the organization's accounting system.
Billing Schemes Perpetrated by employees who cause their employer to issue a payment to a false
supplier by submitting invoices for fictitious goods or services, inflated invoices, or
invoices for personal purchases.
check tampering taking advantage of employee access to blank company checks, using a password
to
steal computer-generated checks, or producing counterfeit checks.
Employee reimbursement scheme making false claims for reimbursement, or inflating or creating fictitious business
expenses. (Travel /meal reimbursement.
corruption Bribery, illegal gratuities, and/or extortion.
bribery when something of value is offered or given to influence a business decision
Illegal Gratuities when something of value is given to an employee to reward a business decision.
Extortion when a person demands payment or seeks to influence a business decision by
threat of harm through loss of business or personal injury.
Stuvia 2026-2027
, CFCI Certified Financial Crimes Investigator - Exam Prep, Study Guide, Practice Questions & Verified Answers
Kickback Schemes involving employees and vendors, often using inflated billing or invoices for which
the employee is paid a portion of the inflated or fictitious invoice.
credit card fraud the creation, sale, or use of a counterfeit credit card, or the use of a stolen credit or
debit card.
C.N.P Card not present transactions
identity fraud involves the unauthorized use of another person's personal data for illegal financial
benefit. Involves abusing the stolen information to transact personal business in the
victim's name.
identity theft the fraudulent acquisition or stealing of confidential personal information.
2 categories that encompass Fraud Theft (stealing money, ID, or assests) and deception (cooking the books, lying to
shareholders, employees or partners)
Myth #1 of the Financial Services "We have very little fraud here" ex: subprime mortgage fraud
Myth #2 of Financial Services "Ethics and training compliance has us covered" Fraud is not always covered in
ethics policy or training.
Myth #3 of Financial Services "Fraud is an unavoidable cost of doing business" Fraud is usually not serious
enough to destroy a financial service firm, it is much more than necessary cost of
doing business.
Chapter 1 review points • The numbers do not lie: Fraud is a huge worldwide problem—for all organizations.
• Financial services fraud. Seventy-one percent of financial institutions experienced
attempted payment fraud (check fraud, ACH fraud, or credit card fraud in 2017).
• Definitions of fraud. The broad definition of fraud is illegal activity representing
either theft or deception, or a combination of both.
• Myths about fraud. It is easy to become complacent about fraud, but doing so can
be very costly.
Fraud does occur in every organization, and is potentially serious enough to cause
major long-term damage.
• Main types of fraud. Countless varieties of fraud threaten financial institutions.
Fraudsters are con-
stantly thinking up new ways to target financial services institutions.
20-60-20 rule of human component of fraud 20% of people will never commit fraud
60% are fence sitters and may commit fraud if given the opportunity
20% of people inherently dishonest (pg 29)
2 types of insider fraud threat Employee level fraud and management level fraud
Inverse ratio between the level of organization at which Management level fraud is committed less frequently than employee level fraud
fraud is committed however the financial loss is greater. (pg 30)
Stuvia 2026-2027
Fraud "Any illegal acts characterized by deceit, concealment, or violation of trust. These
acts are not dependent upon the perpetrated by individuals and organizations to
obtain money, property, or services; to avoid payment or loss of services; or to
secure personal or business ad-vantage."
Main types of fraud Internal Fraud and External Fraud
Internal Fraud which involves the employees of the company against which the fraud is
perpetrated
External Fraud deceptive conduct by non-employees that
deprives the organization of value, and/or is undertaken for financial gain.
embezzlement theft or misappropriation of funds placed in one's trust or belonging to one's
employer.
financial fraud "cooking the books." This type of
fraud generally refers to falsely representing the financial condition of the company,
so as to inflate the value of stock, fraudulently boost executive bonuses, or
otherwise mislead shareholders, lenders, employees, investment analysts, or other
users of the information.
Skimming (cash larceny) Accounts receivable fraud, this
involves simply stealing cash before it enters the organization's accounting system.
Billing Schemes Perpetrated by employees who cause their employer to issue a payment to a false
supplier by submitting invoices for fictitious goods or services, inflated invoices, or
invoices for personal purchases.
check tampering taking advantage of employee access to blank company checks, using a password
to
steal computer-generated checks, or producing counterfeit checks.
Employee reimbursement scheme making false claims for reimbursement, or inflating or creating fictitious business
expenses. (Travel /meal reimbursement.
corruption Bribery, illegal gratuities, and/or extortion.
bribery when something of value is offered or given to influence a business decision
Illegal Gratuities when something of value is given to an employee to reward a business decision.
Extortion when a person demands payment or seeks to influence a business decision by
threat of harm through loss of business or personal injury.
Stuvia 2026-2027
, CFCI Certified Financial Crimes Investigator - Exam Prep, Study Guide, Practice Questions & Verified Answers
Kickback Schemes involving employees and vendors, often using inflated billing or invoices for which
the employee is paid a portion of the inflated or fictitious invoice.
credit card fraud the creation, sale, or use of a counterfeit credit card, or the use of a stolen credit or
debit card.
C.N.P Card not present transactions
identity fraud involves the unauthorized use of another person's personal data for illegal financial
benefit. Involves abusing the stolen information to transact personal business in the
victim's name.
identity theft the fraudulent acquisition or stealing of confidential personal information.
2 categories that encompass Fraud Theft (stealing money, ID, or assests) and deception (cooking the books, lying to
shareholders, employees or partners)
Myth #1 of the Financial Services "We have very little fraud here" ex: subprime mortgage fraud
Myth #2 of Financial Services "Ethics and training compliance has us covered" Fraud is not always covered in
ethics policy or training.
Myth #3 of Financial Services "Fraud is an unavoidable cost of doing business" Fraud is usually not serious
enough to destroy a financial service firm, it is much more than necessary cost of
doing business.
Chapter 1 review points • The numbers do not lie: Fraud is a huge worldwide problem—for all organizations.
• Financial services fraud. Seventy-one percent of financial institutions experienced
attempted payment fraud (check fraud, ACH fraud, or credit card fraud in 2017).
• Definitions of fraud. The broad definition of fraud is illegal activity representing
either theft or deception, or a combination of both.
• Myths about fraud. It is easy to become complacent about fraud, but doing so can
be very costly.
Fraud does occur in every organization, and is potentially serious enough to cause
major long-term damage.
• Main types of fraud. Countless varieties of fraud threaten financial institutions.
Fraudsters are con-
stantly thinking up new ways to target financial services institutions.
20-60-20 rule of human component of fraud 20% of people will never commit fraud
60% are fence sitters and may commit fraud if given the opportunity
20% of people inherently dishonest (pg 29)
2 types of insider fraud threat Employee level fraud and management level fraud
Inverse ratio between the level of organization at which Management level fraud is committed less frequently than employee level fraud
fraud is committed however the financial loss is greater. (pg 30)
Stuvia 2026-2027
