Check fraud isn’t a new problem, but it continues to demand new attention.
According to the Association for Financial Professionals’ 2025 Payments Fraud & Control Survey, 63% of organizations experienced attempted or actual check fraud in 2024, making checks the payment method most frequently targeted by fraudsters. At the same time, the FBI and U.S. Postal Inspection Service have warned that mail theft-related check fraud continues to rise, with suspicious activity reports nearly doubling between 2021 and 2023.
For financial institutions, however, the challenge extends beyond fraud losses. Every suspicious check can trigger manual reviews, investigations, exception processing, and coordination across multiple systems. As fraud becomes more sophisticated, the operational burden of detecting and investigating it continues to grow.
The question isn’t simply, “How do we stop more fraud?”
Instead, the question institutions should be asking is, “Do we have a monitoring strategy that gives us the visibility to identify risk before it becomes an operational burden?”
Below are five areas every financial institution should evaluate.
1. Are You Building Monitoring on a Strong Foundation?
Effective monitoring starts long before the first transaction occurs.
Customer due diligence, account onboarding, and risk profiling determine whether monitoring systems have the context needed to identify suspicious behavior. Without that context, alerts become generic, investigations take longer, and analysts spend valuable time gathering information manually.
Ask yourself:
Do we establish expected account behavior during onboarding?
Are customer risk ratings incorporated into monitoring decisions?
Do monitoring rules leverage customer profile information, not just transaction activity?
When these foundations are missing, every investigation becomes more difficult than it should be.
2. Can You Recognize When Activity Is Truly Unusual?
Traditional monitoring often relies on fixed thresholds. Today’s fraud doesn’t.
Fraudsters intentionally operate below traditional limits, making subtle changes that appear legitimate until viewed against a customer’s normal behavior.
Instead of asking whether a transaction exceeds a rule, institutions should ask whether it makes sense for that customer.
Consider questions like:
Have we defined what “normal” looks like for each customer segment?
Can we identify changes in transaction velocity, payment type, or volume?
Do alerts identify deviations from expected customer behavior?
Context matters just as much as transaction amount.
3. How Quickly Can You Detect Fraud?
Time is one of the biggest differentiators between containing fraud and managing its aftermath.
Many institutions still rely heavily on end-of-day reviews or manual investigation queues. While these remain important, fraud increasingly requires real-time visibility.
Think about your current capabilities:
Are ACH transactions monitored as they occur?
Are check images analyzed for fraud indicators?
Does online banking activity contribute to fraud alerts?
Can suspicious activity trigger preventative action before funds leave the institution?
The faster you identify risk, the more options you have to stop losses and reduce investigation workloads.
4. Do You Have Visibility Across Every Payment Channel?
Fraud rarely stays within a single channel.
A customer may deposit a fraudulent check, initiate an ACH transfer, log into online banking from an unfamiliar device, and move funds externally, all within a short period of time.
If monitoring tools operate independently, investigators must piece together the story manually.
Ask yourself:
Does monitoring cover checks, ACH, wires, cash, and card activity?
Are real-time controls supplemented with end-of-day monitoring?
Are new payment products incorporated into your monitoring strategy?
The more disconnected your monitoring environment, the more difficult investigations become.
5. Are Your Investigations Making Your Institution Stronger?
Every fraud investigation produces valuable intelligence.
The most mature institutions don’t simply resolve alerts, they use investigation outcomes to strengthen policies, adjust controls, and improve monitoring over time.
Questions worth asking include:
Have fraud trends changed transaction limits or funds availability policies?
Are recurring alerts revealing control gaps?
Are investigation findings feeding continuous improvements to monitoring?
Monitoring shouldn’t be a reactive process. It should continuously evolve as fraud evolves.
The Bigger Picture
Check fraud may be today’s headline, but it’s really exposing a larger operational challenge.
Growing investigation queues. Manual reviews. Disconnected workflows. Limited visibility. Delayed decisions.
These issues don’t just increase operational costs, they reduce an institution’s ability to respond to emerging threats.
Building a comprehensive monitoring strategy means looking beyond individual fraud events and asking whether your monitoring program is providing the visibility, context, and actionable intelligence your team needs.
How Does Your Monitoring Strategy Measure Up?
We’ve created a practical assessment to help banks and credit unions evaluate their current monitoring approach.
The checklist walks through customer due diligence, expectations-based monitoring, real-time detection, layered monitoring, and continuous improvement—helping you identify strengths as well as opportunities to strengthen your fraud program.
Download the free guide: Building a Comprehensive Monitoring Strategy: A Practical Assessment for Banks and Credit Unions
And don’t miss our Thursday webinar series, where our fraud experts explore real-world monitoring strategies, emerging fraud trends, and practical approaches to reducing operational burden while improving detection. Register for an upcoming webinar.
Sources:
https://www.frbservices.org/news/fed360/issues/060325/check-fraud-remains-top-threat
https://www.fbi.gov/investigate/cyber/alerts/2025/mail-theft-related-check-fraud-is-on-the-rise