Fraud never truly disappears. It adapts. And one of the oldest forms of financial crime — cheque fraud — is staging a comeback. In an era shaped by digital payments and advanced cybersecurity, the quiet return of cheque-based fraud may seem unexpected. However, for scamsters, paper cheques are the perfect loophole in an increasingly high-tech financial environment.
According to Nasdaq’s Global Financial Crime Report, cheque fraud led to global losses exceeding $26 billion in 2023 — close to 80% of which occurred in the Americas alone. This highlights that cheque fraud is not a relic of the past. It remains a significant global threat, particularly in regions with high cheque usage.
The scale of the problem is anything but minor and there are two main reasons behind this comeback. As banks have become more effective at identifying anomalies in online transactions — such as unusual login patterns, flagged IP addresses or transaction irregularities — criminals are reverting to less scrutinized, analogue methods. Secondly, physical cheques do not always trigger alerts and legacy systems may not be equipped to monitor their movement effectively. Fraudsters can simply steal legitimate cheques from postal boxes, alter key details like payee names and amounts and present them at different branches or entirely separate banks. Unlike complex cyberattacks, cheque fraud often requires no more than access to a stolen envelope and a forged ID.
However, cheque fraud is rarely isolated. It is often part of larger schemes involving identity theft, synthetic identities and money laundering. Criminals may use counterfeit documents or fake IDs to deposit stolen cheques and then quickly move the money through mule accounts before institutions can respond. These tactics are also hard to catch with conventional tools.
As a result, institutions face not only financial losses but also operational disruption and customer disputes. Restoring client trust after a fraud can take considerable time and reputational damage can linger long after the financial loss has been addressed. The growing volume of such incidents is also placing a strain on fraud departments and service teams, delaying investigations and increasing the risk of unresolved cases slipping through the cracks.
That said, institutions are now bound to rethink their frameworks for fraud detection and risk management. The objective is no longer to simply guard against digital threats — it is to secure every point of vulnerability, whether physical, digital or somewhere in between. Here are some measures institutions can take. Firstly, they can implement layer controls across channels. They can combine digital detection tools with physical verification checks, apart from cross-examining the in-branch activity with account behavior. Another area they can focus on is strengthening monitoring for cheque-related transactions. The use of Artificial Intelligence (AI) to detect patterns like unusual deposit locations, rapid fund movements and out-of-pattern cheque usage can be beneficial. Institutions can also invest in image analysis tech — they can analyze handwriting, alterations and physical characteristics of cheques to flag suspicious items before they’re cleared. Educating customers on how to mail cheques safely, avoid sharing cheque images and verify endorsements is also bound to help. Lastly, staff training can also go a long way. Employees should be trained to verify signatures, check for physical tampering, confirm ID and escalate suspicious cheques before processing. A few seconds of scrutiny at the counter can prevent major losses.
Anti-money laundering (AML) teams should also be looped into fraud prevention efforts closely as part of a wider financial crime compliance strategy. Often, a stolen cheque is the first step in a broader laundering scheme involving digital fund transfers and synthetic identities. By integrating data from both domains, institutions can build a more connected risk picture, identify criminal patterns faster and prevent further damage.
By and large, the return of cheque fraud serves as a clear reminder: Criminals will continue to innovate and the methods they use will not always be advanced. As digital defences improve, old vulnerabilities re-emerge. That is why vigilance across all transaction types remains essential. Institutions must treat every channel — physical or digital — as a potential risk vector.
The financial organizations best prepared for this environment will be those that evolve quickly, invest in integrated defenses and ensure their teams are equipped with the tools and knowledge needed to anticipate threats before they escalate.
how can Infosys BPM help?
Infosys BPM’s Financial Crime Compliance (FCC) services enable financial institutions to proactively combat cheque fraud and related threats. With intelligent automation, advanced analytics and AI-powered detection capabilities, Infosys BPM strengthens enterprise-wide compliance. From transaction monitoring to KYC, AML and screening operations, its FCC services enhance risk management outcomes while reducing false positives and ensuring excellent anti-money laundering compliance.
