Cases of financial institutions being defrauded are not uncommon worldwide. The following are a few representative specific cases, showing the detailed process and consequences of fraud.： --- ### **1. The collapse of the Bank of Bahrain (1995)** -**Background**: Bank of Bahrain is one of the oldest commercial banks in the UK. It went bankrupt due to fraud by employee Nick Leeson. -**Means of fraud**： -Leeson worked as a trader in the Singapore branch, using the ”88888" wrong account to cover up trading losses. -He is also responsible for trading and back-office settlement, lacks supervision, and covers up losses through forged documents and false transactions. -A large number of bets on Nikkei index futures caused the market to plummet due to the Kobe earthquake in Japan in 1995, resulting in a loss of US11.4 billion. -**Result**: The Bank of Bahrain is bankrupt and was acquired by the ING Group of the Netherlands at a symbolic price of 1 pound. -**Lesson learned**: The risk of “front-end and back-office responsibilities are not separated” is exposed, prompting financial institutions to strengthen internal control and risk isolation. --- ### **2. Theft of the SWIFT system of the Central Bank of Bangladesh (2016)** -**Background**: Hackers invaded the system of the Central Bank of Bangladesh through phishing attacks and tried to steal nearly 1 billion U.S. dollars. -**Fraud process**： -**Phishing attack**: Hackers send phishing emails containing malicious software to obtain the SWIFT system login credentials of central bank employees. -**Forged transfer instructions**: 35 transfer requests were sent to the Federal Reserve Bank of New York through the SWIFT system, totaling US9951 million. -**Money laundering**: Part of the funds (approximately US881 million) were laundered through Philippine casinos and underground money banks, and part of the money was eventually recovered. -**Result**: The Central Bank of Bangladesh lost US881 million, exposing a security breach in the SWIFT system. -**Lessons learned**: Financial institutions need to strengthen network security protection, especially multi-factor authentication and abnormal transaction monitoring of key payment systems. --- ### **3. Madoff Ponzi Scheme (2008)** -**Background**: Bernard Madoff defrauded investors of US665 billion through a Ponzi scheme. -**Means of fraud**： -**False promise of return**: Madoff promised stable and high returns, using the funds of new investors to pay the “gains” of old investors. -**Forged transaction records**: Its investment company has never conducted actual transactions, and all statements are forged. -**Use of trust networks**: Mainly aimed at wealthy individuals, charities and financial institutions (such as HSBC and Santander). -**Result**: During the 2008 financial crisis, the capital chain was broken, the scam was exposed, and Madoff was sentenced to 150 years in prison. -**Lessons learned**: Independent audit and supervision of investment products need to be strengthened, and the commitment to “high return and low risk” needs to be vigilant. --- ### **4. German Wirecard accounting Scandal (2020)** -**Background**: German payment giant Wirecard fictitious 1.9 billion euros in assets, becoming one of the largest financial fraud cases in Europe. -**Fraud process**： -**Fake fake accounts**: The company claims to hold huge amounts of funds in banks in the Philippines and Singapore, but the actual accounts are empty. -**Third-party cooperative fraud**: Falsifying revenue and cash flow through outsourcing partners to cover up business losses. -**Audit loophole**: Ernst & Young did not verify the bank account on the spot, resulting in the scam going undetected for a long time. -**Result**: Wirecard went bankrupt, the CEO was arrested, and the reputation of the German financial regulator was damaged. -**Lessons learned**: Emphasize the rigor of third-party audits and the importance of transparency in financial technology companies. --- ### **5. Credit card cash-out fraud (Cosmos Bank case, India, 2018)** -**Background**: Cosmos Bank of India suffered a hacker attack and lost nearly 135 million rupees. -**Fraud process**： -**Malware attack**: Hackers invaded the banking system and cloned thousands of debit card information. -**Global collaborative cash out**: Withdraw cash at ATMs in 28 countries at the same time, and initiate fake transfers through the SWIFT system. -**Result**: Bank customer funds were damaged, and some of them were recovered through insurance. -*****: It is necessary to monitor abnormal transactions in real time and upgrade the anti-counterfeiting technology of payment cards (such as chip cards instead of magnetic stripe cards). --- ### **6. Lincoln National Insurance Fraud Case (early 2000s)** -**Background**: Executives of Lincoln National Insurance Company inflated their income through reinsurance agreements. -**Means of fraud**： -**False reinsurance transactions**: Collude with reinsurers to sign contracts without actual risk transfer, and exaggerate the income from financial statements. -**Manipulation of reserves**: Underestimate the reserves for insurance compensation and exaggerate the company's profitability. -**Result**: The company was fined US1100 million and its executives were sued. -**Lessons learned**: The accounting transparency of the insurance industry needs to be strengthened to prevent the use of reinsurance for financial fraud. --- ###**Summary and Preventive measures** 1. **Technical defense**: Upgrade network security systems (such as AI monitoring abnormal transactions) to protect key systems such as SWIFT and payment cards