I served on the CUNA Mutual Bond Study Committee probably 30 years ago. Internal fraud was the biggest cause of loses back then. Internal fraud has always been the cause of the biggest losses.

That's because employees have a big advantage in circumventing internal controls. Credit unions, in particular, are vulnerable because most credit unions, about 90%, are under $100 million in assets and have few employees. That limits the segregation of duties.

It also means the credit union is not likely to have an internal audit function. The best way to prevent fraud is to have good internal controls that are operating as designed.

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