Importance of Fraud Prevention in India
May 23, 2022

‘Fraud’ Prevention is Better than Cure

The approach to dealing with fraud in commercial transactions has always been a reactive one. While commercial transactions have been a part of human society since antiquity, the origin of the word ‘Fraud’ can be traced back to 1345 A.D from the Latin word ‘Fraus’, which means deceit, injury, and offense. In the year 1623, the Oxford English Dictionary coined the term "to fraud". Thereafter the word ‘Fraud’, had been termed formally & legally and became a metaphor for any ‘act of deception carried out for unfair, undeserved and/or unlawful gain’. With the evolution of commercial & complex transactions, we also started witnessing the rise of frauds, majorly in white-collar operations and deals. Around the world, we have examples of many frauds like Madoff Fraud and Charles Ponzi Fraud, to PNB bank and Coalgate scam in India. We have many more to add to this list. The fraud triangle theory identified pressure, opportunity, and rationalization as the three elements of fraud. Digital Transformation: An Overview Today, with the rise of technology and digitization around the globe, we are witnessing a transition; the speed of transactions has multiplied by many folds and has brought unprecedented ease to the public at large. However, this digital transformation has also opened up new avenues for fraudsters. Unfortunately, many people consider fraud and deceit as a normal part of our daily lives, but this should not happen. Thanks to the new age technologies, we are now well equipped to counter any leakage or fraud proactively and design a preventive mechanism to stop fraud. Digital transactions along with frauds committed are at an all-time high.  With the Reserve Bank of India (RBI) coming with guidelines for FinTech, online/mobile banking, the virtual global market for the online platform, and mobile Apps in 2021, the motive of the regulatory and government bodies is clear, they want to deal with frauds, unlawful acts, and deceit with an iron hand. The Bottom Line With so many changes, led by digital and artificial intelligence in the forefront, the approach to dealing with fraud and fraudsters must change from reactive and detective to proactive and preventive. Fraud has become a big menace, and such instances are increasing at an alarming rate, it's high time that we employ digital tools to fight fraud proactively.   Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale. Written by: Sanjay Kumar, COE- Deterrence & Vigilance, Bajaj Allianz General Insurance  

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