Skip to content

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

A branch operations manager at a regional bank has accumulated heavy personal gambling debts. He knows he can override the dual-approval control on wire transfers because his login is trusted by junior staff. He tells himself he is only 'borrowing' the funds and will repay them after a winning streak. In the fraud triangle, which element does the 'borrowing' belief represent?

The belief that he is merely borrowing the money is rationalization. It is the internal justification that lets a perpetrator reconcile the act with his self-image. The debts are the pressure and the override access is the opportunity, so those two elements do not describe the belief.

  1. APressure
  2. BOpportunity
  3. CRationalizationCorrect
  4. DCapability

Explanation

The fraud triangle consists of pressure, opportunity and rationalization. The gambling debt is the pressure and the ability to override dual approval is the opportunity. Telling himself he is only borrowing is a self-justification of the act, which is rationalization. Capability belongs to the fraud diamond, not the triangle.

Did you get it right without looking?

One question tells you little. A timed set on Case Study: Financial Crime and Fraud shows your real accuracy, how long you take and where you lose marks.

Practise Case Study: Financial Crime and FraudFree diagnostic mock

More Case Study: Financial Crime and Fraud questions