Protecting public funds is a high priority for all governments. The Uniform Commercial Code (UCC) regulates and defines the responsibilities of counterparties in business and banking transactions. The UCC states that, in certain situations, liability and monetary loss in a fraudulent transaction is split between the counterparties in a transaction based on each party’s due diligence and negligence. Consequently, to reduce liability in the event of a fraudulent transaction, it is important to have proper controls in place.
Advances in technology have reduced the effectiveness of traditional fraud prevention techniques and have even enabled new forms of fraud. For example, in the past, many governments relied upon physical security features embedded in check stock to prevent check fraud. These included watermarks, unique colours, and graphical designs.
Advanced duplication technology and remote deposit capture have reduced the effectiveness of these physical measures to prevent fraud