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FRM Part II · FRM Exam Part II · Case Study: Financial Crime and Fraud

A bank's whistleblowing hotline receives few reports, and a staff survey shows employees fear retaliation. Which action is most likely to improve the bank's fraud detection capability?

The best action is a confidential, independently run reporting channel with clear anti-retaliation protection. Tips are a major way frauds are discovered, and staff will only report if they feel safe. Routing reports through direct managers would deter reporting further.

  1. AEstablish a confidential, independently administered reporting channel with explicit anti-retaliation protectionCorrect
  2. BIncrease the dollar threshold for transaction approvals
  3. CReduce the frequency of internal audits to lower employee stress
  4. DRoute all reports through the employee's direct manager for faster resolution

Explanation

Tips are a leading source of fraud detection, and fear of retaliation suppresses them. Confidential, independent channels with protection address this directly. Routing reports via the line manager worsens the problem, especially if the manager is involved.

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