Legal Definitions - bank fraud

Bank fraud refers to the act of intentionally deceiving a financial institution, such as a bank or credit union, or engaging in deceptive practices related to financial transactions, with the goal of obtaining money, property, or other assets, or causing the institution a loss. It is a specific type of fraud where the target of the deception or the means used involves a financial institution.

Here are some examples to illustrate bank fraud:

• False Information on a Loan Application: A person applies for a business loan from a bank, knowingly submitting fabricated financial statements and inflated asset values to make their company appear more creditworthy than it actually is. Their intention is to secure a large loan that the bank would not have approved if it knew the true financial state of the business.

  This is bank fraud because the individual intentionally provided false information to the bank to deceive it into granting a loan, thereby obtaining funds under false pretenses and exposing the bank to a potential loss.

• Counterfeit Check Scheme: An individual creates and deposits several high-value counterfeit checks into their bank account, drawn on accounts that do not exist or have insufficient funds. Before the bank can identify the checks as fraudulent, the individual quickly withdraws cash from their account using ATMs and debit card purchases, intending to keep the money and leave the bank with the loss when the checks bounce.

  This constitutes bank fraud because the individual used deceptive instruments (counterfeit checks) to defraud the bank, intending to obtain funds that do not legitimately belong to them and cause the bank a financial loss.

• Impersonation for Unauthorized Wire Transfer: An individual obtains sensitive personal information about a wealthy bank client through phishing. They then call the bank, impersonating the client, and authorize a large wire transfer from the client's account to an offshore account controlled by the fraudster. The bank processes the transfer, believing it is acting on the legitimate client's instructions.

  This is an example of bank fraud because the perpetrator used deception (impersonation and false authorization) to manipulate the bank into transferring funds from a legitimate account to an unauthorized one, resulting in the theft of assets under the bank's control.