We have written about the simple fraud of deception using erasable ink on cheques in our earlier article dated 14 March 2019, The Magic of erasable ink and Bank reconciliation. The same ploy is reported again 3 years later on Straits Times dated 4 October 2022 by a finance executive in an interior design company that used an erasable ink on the cheque amount and payee. A total amount of $100,000 was siphoned from the company bank account in 2021 by erasing and replacing the payee name and payment amount.
Similarity between these 2 cases:
- Both use erasable ink and replacing the payee name and payment amount after the cheques were signed by the authorised signatory.
- The fraud was carried out for less than 1 year before it was discovered.
- The fraudster was an executive/clerk handling accounts.
- The ill gotten money was spent on gambling activities, the earlier on casino while the recent case on online gambling.
- No restitution was made.
- The fraud was discovered upon the review of the bank account or some acts of bank reconciliation.
These findings illustrate the vulnerability of using cheque payments, the need for a separate person in the preparing and reviewing roles respectively for cheque payment. If cheque payment is performed without supervisory controls, you will run the risk of a possible fraud by your own company accounting person. You then have to be prepared that the money siphoned will never be returned. The saving grace is a simple review of bank accounts or bank reconciliation will likely uncover this fraud.