What Does a Fraud Analyst Do? Your Ultimate Career Guide

Key takeaways

Fraud analysts monitor financial activities for any suspicious activity, using machine learning, artificial intelligence, and other tools.

• The median total pay for a fraud analyst is $64,000 [1].

• As a fraud analyst, you may gather and analyze data, conduct investigations, prepare evidence, and testify in court, while also maintaining analytics systems. 

• You can use specialized software and data analytics to monitor financial transactions and bank accounts for potential fraud. 

Learn more about what a career as a fraud analyst looks like, the median fraud analyst salary, and the types of skills and education that can help you gain entry to the field. If you’re ready to prepare for a career as a fraud analyst, consider enrolling in the IBM Data Analyst Professional Certificate. You’ll have the chance to learn about practical tools that data analysts use and explore various data visualization techniques. Upon completion, you’ll have earned a career credential that demonstrates your knowledge to potential employers.

What is a fraud analyst?

A fraud analyst is a professional who helps monitor financial activities for anything suspicious that might point to fraud. They review bank accounts, accounting paperwork, other documents, and various types of transactions to ensure everything is accurate and complies with the law. Fraud analysts work across various industries, including law enforcement, banking, and government, through the use of data automation tools, quick thinking, and cutting-edge technology, such as machine learning (ML) and AI.

Why is fraud analytics important?

Fraud analytics is essential because online banking, shopping, and data transfer and storage are all vulnerable to security issues like phishing emails or hacking. The already staggering sum of money lost to fraud only increases each year. According to the Federal Trade Commission, scammers alone cost consumers more than $12.5 billion in 2024, up 25 percent from 2023, demonstrating the broad scope of the heavy burden financial fraud brings with it [2]. 

Financial fraud is a serious issue that affects individuals, businesses, and institutions. Fraud analytics uses big data analysis techniques to monitor fraudulent activity and then address that activity in real-time.

With fraud analytics, businesses have the tools to identify fraud before, during, or after illegal activity, which is crucial for minimizing financial losses and reducing the likelihood of future breaches.

What does a fraud analyst do?

In this role, professionals monitor financial transactions, bank accounts, and documents for any potential fraudulent activity. They use specialized software and data analysis to help identify any alarming patterns and often involve law enforcement upon finding evidence of fraud. They help to ensure trust and minimize financial losses for a company and its stakeholders.

Fraud analyst jobs: Tasks and responsibilities

The specific responsibilities of a fraud analyst vary based on the industry you might work for, but some general tasks to expect include:

• Gather and analyze large amounts of financial data.

• Use tools such as data mining and ML.

• Conduct investigations to find the culprits of fraudulent activity. 

• Maintain analytics systems to help reduce instances of fraud.

• Implement new solutions and processes to increase effectiveness.

• Prepare evidence and testify in court concerning any findings.

Fraud analysts are the frontline defenders of a bank, company, or institution’s financial data. They are key players in making sure that sensitive information stays protected. Upon finding evidence of potential fraud, fraud analysts work with law enforcement to bring the culprit to justice. Then, they help create new policies to minimize risk and the chance of fraud occurring again.

Fraud analyst skills

Fraud analysts must be extremely detail-oriented and strong problem-solvers to detect fraud among large amounts of data. Skepticism is also helpful in seeing anomalies and suspicious activity that may otherwise be difficult to notice. Some other technical and workplace fraud analyst skills include:

Technical skills

• Experience with fraud detection software and tools

• Programming and database knowledge

• Malware and risk analysis

• Templating and ratios

Workplace skills

• Strong judgment and threat detection skills

• Effective communication skills

• Creativity in problem-solving

• Ability to work alone and as part of a larger team

Fraud analysis and AI

As the advancement of technology has resulted in increasingly complex fraudulent activities, fraud analysts have begun to implement cutting-edge technology like machine learning and artificial intelligence (AI) to help combat these hacking attempts. Fraud analysts use these advanced tools to employ mathematical algorithms on massive data sets and rate their chances of fraud with a risk number. The system then makes a recommendation if the translation looks like it might be fraudulent.

Then, fraud analysts take over and either open an investigation or approve the transactions. AI allows fraud analysts to do the more high-level parts of their job without spending much time and money on the more menial task of sifting through data.

Read more: How Does AI Work? Basics to Know

Job outlook and salary for fraud analysts

Fraud analysts make a median total pay of $64,000 [1]. This figure includes base salary and additional pay, which may represent profit-sharing, commissions, bonuses, or other compensation. Because of the essential role financial analysts play, the job outlook remains promising, with demand largely expected to grow at a faster-than-average pace in the coming years [3]. The federal government employs the majority of fraud analysts, but others work in hospitals, education, and banking. 

What is the difference between a fraud analyst and a forensic accountant?

A fraud analyst has the responsibility of analyzing data to determine if fraudulent activity has occurred. Meanwhile, a forensic accountant has the specific duty to find instances of illegal financial activity in individuals and businesses and to report those findings. The biggest difference here is that a fraud analyst works to find and prevent fraud to protect consumers, while a forensic accountant investigates the illegal activity of consumers.

How to become a fraud analyst

The fraud analyst career path can provide various opportunities for you to grow and advance. After spending several years in an entry-level fraud analyst position, you can either continue within the fraud analyst career ladder, gaining more responsibility and money as your title changes, or you might move into other roles, such as consultant or finance manager.

To get started down the path of a fraud analyst career, take time to look at different fraud analyst job descriptions to learn what common skills or qualifications employers tend to look for. Then, you’ll be able to compare those requirements to your skill set and determine if you need additional training or education before applying.

Education and training

The majority of employers prefer fraud analyst candidates who have a bachelor’s degree. Criminal justice or computer science are two options to consider, but anything that allows you to learn about data analysis or fraud detection is helpful. Once you’ve gained a job as a fraud analyst, you’ll likely spend about a year training on the job in the specifics of the industry you’ve chosen.

Certifications for fraud analyst careers

Some employers may prefer hiring someone with credentials on their resume, or you may want to bolster your skills by earning a certification, such as the Certified Fraud Examiner (CFE) credential from the Association of Certified Fraud Examiners. Doing so provides demonstrable proof of your knowledge in areas like resolving fraud allegations, investigative techniques, and building programs to combat fraud. If you gain information security experience, you may pursue ISACA’s Certified Information Security Manager (CISM). During preparation for the CISM exam, you’ll gain a deep foundation in security risk assessments, governance, and more.

Discover free resources to advance your career

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