Beyond surveillance: the value of fraud detection technology in cash management activities
October 18, 2012
By
Cummins Allison
www.cumminsallison.com
Video
surveillance is an ever-present fraud prevention technology in today’s casinos.
However, going beyond what can be picked up by a camera is critical when it
comes to preventing fraud in cash management activities. Whether it’s deterring
players on the gaming floor or employees throughout the property, casinos need
to be cautious of this activity at all levels.
Incorporating
counterfeit note detection into all currency processing systems is a technology
need—not a want. The better the counterfeit detection, the better the fraud control.
The sooner a counterfeit note is detected, the better the chances of finding the
source and preventing future fraudulent activities from occurring. Today’s
advanced counterfeit detection solutions are sophisticated, comprehensive and
simple to use; making it easier than ever to address the pain points often
associated with fraud detection.
WHY
COUNTERFEIT DETECTION MATTERS
In
the Association of Certified Fraud Examiners’ 2012 Report to the Nations, participants
estimated that the typical organization loses 5 percent of its revenues to
fraud each year; with the median loss totaling $140,000 and more than one-fifth
of fraud cases resulting in losses of at least $1 million. Casinos that fail to
address the potential for fraudulent activity can clearly suffer significant
financial losses.
Proactive
detection is crucial. If counterfeit detection devices are not used at a note’s
source of entry and these notes are identified later during the deposit
preparation process or at the bank, it’s generally too late to trace them back
to the source of origin. Some gaming properties are also subject to
charge-backs from their bank if counterfeit notes are included in their
deposit, which can lead to reduced revenues for the property. Even worse, these
suspect notes may be recirculated within the casino, which can erode the trust
of patrons and the property’s reputation.
SELECTING
THE RIGHT COUNTERFEIT DETECTION TECHNOLOGY
Choosing
the right counterfeit detection solution doesn’t have to be a daunting task. When
evaluating options, gaming properties should keep the following in mind:
• Level
of loss: Casino
operators should be aware of how much loss their property has due to
counterfeit notes; this will enable them to appropriately assess their scale of
fraudulent activity. The return on investment of any technology implemented
will be measured based on this level of loss.
• Where
technology will be implemented: Casino
operators must identify the locations within their property where the
technology will be most beneficial. In general, the most effective location is
the point where cash is accepted (e.g. cage, slot machines, automated kiosks
that accept bills) and in the main bank where cash receipts and shipments are
verified. Properties might also consider deploying fraud detection in the soft
count room. Although it is more difficult to identify the source by the time a
counterfeit bill has made it to this location, it may be useful to pinpoint
where on the floor the casino has become vulnerable to these losses. It’s also
important to consider how much space is available for this type of technology,
keeping in mind that vendors who provide compact, sophisticated equipment may
provide the most flexibility.
• Advanced
counterfeit detection capabilities: With the advent
of newer security features, currency processing systems have become much more
sophisticated. Today’s advanced systems offer traditional currency processing
capabilities, plus additional scanning technologies to discern design
discrepancies that clearly indicate a bill is counterfeit. For example, the Cummins Allison JetScan iFX currency
scanner offers six different modes of
detection sensing—with varying levels of sophistication—to meet the specific
needs of currency processors. Casino operators should look for systems that
incorporate detection technologies such as optical ultraviolet (UV), infrared
(IR) and fluorescence sensors and magnetic sensors which are capable of
examining the full width of the note.
• Ability
to archive and retrieve information: The JetScan iFX
is also equipped with capabilities that enable a property to archive cash
deposits, checks and tickets. The device features digital imaging technology
that simultaneously scans the front and back of each bill, check and ticket,
captures and stores serial numbers, scans for counterfeits and counts mixed
bills, all at a speed of 1,200 bills per minute. This information can later be
retrieved to identify perpetrators of fraudulent activity or locations within
the casino that are particularly susceptible to fraud. This information can be
particularly invaluable when addressing Title 31 regulations and reporting
requirements. In addition, this information can be used as a training
opportunity with employees; helping them better identify counterfeit bills as
part of a transaction.
SERIAL
NUMBER CAPTURE IS CATCHING ON
Serial
number capture is a relatively new technology that is gaining momentum due to
its many uses and its non-invasive nature; which is why some of today’s
advanced currency processing solutions include this capability. In fact, the
JetScan iFX can be used to capture full-size images of every note or snippets
of each serial number at up to 1,200 bills per minute without presorting or
facing. If a casino is concerned about hindering the player experience with counterfeit
detection devices, this technology can be used to capture the serial number of
every note accepted at the cashier window, retail outlet or table game. These
serial numbers are stored in a database for future reference and tracking.
Forward-thinking
properties are exploring other uses and benefits of serial number capture, such
as:
•Tracking
notes throughout the casino to better understand the flow of currency from one
source to the next;
•
Providing better accountability for Title 31 reporting;
•
Identifying high-risk areas throughout the property, such as the high limit
gaming areas;
•
Linking transactions to originating parties to help mitigate risk; and
•
Spotting trends of possible fraudulent activity in a proactive manner.
Serial
number capture can also be beneficial when applied to employee possession of
currency. This includes reducing finger pointing and discrepancies by tracking
notes between departments or from employees turning in their banks.
THE
TIME IS NOW FOR FRAUD DETECTION TECHNOLOGY
As
federal regulations regarding the reporting of fraudulent activities become
more stringent and without a decline in the number of perpetrators, it has never
been more critical for gaming properties to embrace fraud detection technology
as part of their cash management operations. However, it’s important to
remember that counterfeit detection does not have to be a disruption to
operations or impedance to the player experience. With a careful assessment of
their needs and the technology solutions that are available, casino operators
can swiftly and easily implement a fraud detection strategy that is uniquely
tailored to their property.
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