FINANCIAL FRAUD IN THE BANKING SECTOR DURING TIMES OF WAR

Abstract

The article examines the issue of the spread of financial fraud in the banking sector during a state of war. The development of information technologies and significant investments by banks have created conditions for the increase in the volumes of financial fraud in the banking sphere. This form of illegal activity leads to financial losses, undermines trust, and damages the reputation among clients. In certain situations, it can even lead to the bankruptcy of a financial institution. A characteristic feature of banking fraud is the ability of perpetrators to target actions both at the financial institution itself and at its clients or partners. Therefore, a bank may become a victim of fraudulent actions or be used merely as a tool in the hands of criminals. Frequently, the culprits are employees of the bank itself. Perpetrating financial fraud in the banking sector can involve a wide range of individuals. Additionally, these individuals can act as deliberate participants in the fraud or as those who do not comprehend their role in fraudulent activities, in other words, individuals manipulated by fraudsters. During financial frauds, perpetrators try to avoid direct connection with the embezzled funds. Initially, the funds are directed through intermediaries. Only after legalization do these funds, acquired through fraud, end up directly in the hands of the fraudster. In the study, the authors examined various approaches to defining the essence of "fraud" and "financial fraud" and identified the most prevalent types before and after the full-scale invasion by Russia. It was determined that phishing and social engineering remain the primary methods of fraud in Ukraine. The analysis included an assessment of the amount of losses from fraud in the banking sector during 2018-2022. The role of the National Bank of Ukraine in ensuring the cybersecurity of the Ukrainian banking system and developing recommendations aimed at reducing the likelihood of fraudulent operations was identified. The majority of fraud cases in the banking sector were found to involve the use of social engineering methods, as perpetrators gain access to information about the bank card and personal data of the client.