Read Aloud the Text Content

This audio was created by Woord's Text to Speech service by content creators from all around the world.

Text Content or SSML code:

Anti-Fraud Overview Our Anti-Fraud Program is essential and equipped to protect the Company from deceptive practices by anyone—including employees, financial professionals, vendors, service providers, customers, or clients. Overview Penn Mutual's Anti-Fraud Program includes various elements designed to prevent and address fraud effectively, including risk assessment, internal controls, policies and procedures, education and awareness, monitoring, detection, investigation, and response. Recognizing these components helps us all contribute to a secure and trustworty environment. Each part plays a crucial role in preventing fraud and maintaining integrity within the Company. Did You Know ? The Association of Certified Fraud Examiners (ACFE) indicates the global cost of fraud is estimated to exceed $4 trillion annually, impacting businesses across all sectors, including insurance and finance. Continued Understanding Fraud Fraud is deceit used to gain something illegally or unethically at another's expense. It can occur in many forms within financial institutions through acts of employees, financial professionals, customers, or third parties. Recognizing the common types of fraud identified below helps us understand potential risks and our role in preventing them: • Internal Fraud: Accounting manipulation • External Fraud: Identity theft or account takeovers • Payment Fraud: Check or wired fraud • Cyber Fraud: Malware or ransomware • Investment Fraud: Ponzi schemes • Mortgage Fraud: Appraisal fraud • Insurance Fraud: Claims fraud • Market Manipulation: Insider trading Did You Know ? Reports from the SEC and FINRA indicate schemes like Ponzi and pyramids have historically defrauded investors of billions. Remaining vigilant is critical to identify and prevent them and other types of fraud. Continued Fraud Prevention Preventing fraud requires robust controls, compliance programs, policies and procedures, and regular audits to detect, prevent, and mitigate risk. Education and awareness, such as this CARE module, also plays a key role. Below is a chart of some essential prevention strategies YOU can do to detect and prevent fraud in your daily activities: Topic Prevention Detection Electronic Signatures: While electronic signatures are convenient, they come with their own risks. Require proper verification to prevent fraud. Verify the client's identity Use Multi-Factor Authentication (MFA) Require signers enter their own email addresses Send documents directly to signers, not through intermediaries Check for IP address irregularities that could indicate fraud, such as an unrecognized IP address compared to previous transactions Compare the signer's email address to the email address used in the application Pay attention to the timing of signatures—follow up if signatures from a client and financial professional occur within minutes of each other or from the same IP address Handwritten Signatures: As handwritten signatures (a.k.a wet signatures) become less common, it's still important to recognize potential irregularities. Use approved e-signature solutions for increased security Keep a signature log of verified handwritten client signatures Utilize digital signature tools like DocuSign for secure document signing Identical signatures may indicate forgery Compare suspect signatures against verified ones for inconsistencies Look for differences in handwriting on previously notarized documents Examine manual documents for signature irregularities Fraudulent Phone Calls: Fraudulent phone calls are a common method used by scammers to obtain personal and financial information. Avoid answering or returning calls from unfamiliar numbers Be aware of international area codes Be cautious of caller ID spoofing: verify caller identity through public records Never share Personally Identifiable Information (PII) or Company Proprietary Information (CPI) over the phone Hang up on suspicious calls immediately Remain cautious, even if a number seems genuine Be wary of callers who speak in low tones or accents you can't understand Be cautious if the caller is unable to answer simple questions about their identity Watch for the use of threats if you don't comply with the caller's demands Look out for calls that start with a prerecorded message (robocalls) Voice characteristics that don't match the client's profile can be a red flag (e.g. a younger voice that doesn't appear to match the client's age, according to their date of birth) Occupational Fraud: This type of fraud involves employees misusing Company resources for personal gain. Internal reporting systems, like hotlines, are effective in detecting such fraud. Conduct ethics, anti-money laundering (AML), and anti-fraud education Limit access to systems and information to only what's necessary for job responsibilities Separate sensitive processes to avoid conflicts of interest Provide employee support programs Implement ongoing monitoring of records Encourage tip reporting from employees and financial professionals Almost $43 billion was lost to identity fraud scams last year, according to AARP. You can effectively combat fraud at Penn Mutual by implementing these prevention and detection measures. Staying aware and vigilant are critical to assure these systems work effectively. Report any suspicious activity to help protect Penn Mutual from fraud. Did You Know ? The Association of Certified Fraud Examiners (ACFE) found that 48% of fraud cases were detected and reported by employees. Your vigilance matters. Continued Warning Categories & Red Flags Being aware of warning signs and red flags can help identify unusual or suspicious activities early. By recognizing the following warning signs, you can identify potential fraud before it escalates. • Unusual Customer Behavior. Customers who cancel policies quickly or request refunds to third parties. An applicant who has no discernible reason for a Company's insurance or investment service and can't explain a reason during a discussion or isn't concerned when there's a loss when a product terminates early. A customer who normally purchases small, regular payment contracts suddenly requests a large lump-sum contract without reason. • Unacceptable Source of Funds. Large cash transactions or transfers from unrelated third parties, perhaps structured to avoid reporting requirements. • Suspicious Documentation. Incomplete information on an application or form, accompanied by secrecy during follow up; changes of address to foreign countries or change of ownership to foreign individuals after opening an account or issuing a policy. • Suspicious Account Activity. Transactions involving undisclosed third parties or unusual patterns, or by an unauthorized premium financing arrangement. Stay alert to unusual behaviors and patters to protect our Company. Continued Seniors and Vulnerable Adult Fraud Given the aging U.S. population and increased senior wealth, fraud targeting seniors and vulnerable adults is a growing concern. We are responsible to recognize the tactics used by fraudsters and take action to protect these individuals. These bad actors use a variety of tactics to exert their authority (such as power of attorney) to access funds, including: mail/email scams, phone calls, internet, and social media. Ways we can help protect seniors and vulnerable adults varies, depending on the products offered: Fixed Insurance and Annuities: Varies by state law, be aware of regulations for compliance. Brokerage Accounts: FINRA allows its members, such as HTK, to place temporary holds on transactions if exploitation of a specified adult is suspected. FINRA Rule 2165 on financial exploitation of specified adults provides a safe harbor for HTK to place a temporary hold on a securities transaction or disbursement of funds or securities from the account of a specified adult if HTK reasonably believes that financial exploitation of the specified adult has occurred, is occurring, or has been attempted. In addition to the FINRA rules, many states have Financial Exploitation and Hold Laws, which generally provide that broker-dealers, investment advisers and other qualified individuals may be required to report financial exploitation of vulnerable or specified adults to governmental authorities. A "Specified Adult" is anyone aged 65 or older, or anyone aged 18 or older with a mental or physical impairment that makes it difficult for them to protect their own best interests. Did You Know ? A 2023 AARP study indicates: "the vast majority of funds stolen from older Americans are purloined by someone they know. Friends, family members, or caregivers are responsible for $20.8 billion, or 72%, of the theft." Strangers account for $8 billion, or 28%. Continued Bad Actors in a Remote Environment Remote work has many benefits, but also presents new challenges in fraud prevention. We must be even more vigilant to prevent and detect bad actors from using our products and services to launder money or commit fraud. Here are some ways to strengthen efforts while still providing a high level of customer service: Enhanced Due Diligence. Use non-documentary methods to verify identities and take extra precautions with documentation. Supplementary Measures. Verify third-party documents, such as bank or credit card statements, for authenticity. Customer Concerns. Report any suspicions or concerns to your leader or AML Officer. Did You Know ? Findings from Deloitte and PwC studies indicate that employees trained in customer service and fraud detection can identify suspicious behavior up to 50% more effectively, blending service with security.