Hacking, Embezzlement Are Major Insurance Issues In Texas
By Anonymous | |
Proquest LLC |
Topping the list are hacking of customer computers, employee embezzlement and ATM signage
Three items included on his talking points are computers, vacations and signage on ATM machines:
Computers
The bank's Financial Institution Bond contains insurance coverage, which, in certain instances, will pay for losses should its computers be hacked. The big concern, however, is not the bank's computers, but customer computers that are being infiltrated by hackers.
Through emails and infected websites, fraudsters are accessing business computers and implementing key loggers. Once they get into the computers, the fraudsters can implement wire transfers through cash management software or send emails to the bank requesting that funds be transferred to various bank accounts across the country.
A bank's Financial Institution Bond (Blanket Bond) does not cover these types of losses unless the bank has called and verified the wire transfer request.
Underwriters at
Obviously, if the bank is calling back, the chances of a loss are more remote. If the wire transfer is less than a bank's deductible, some insurance companies allow for a no callback exemption. Others may give banks a
Invariably, the loss will occur with one of the bank's largest commercial accounts, with customers who are very vocal within the community. At that point, the bank must make a business decision as to whether to reimburse the account or not. Reimbursement will come out of the bank's bottom line, however, and not the insurance company.
A recent example of this involved a customer who on a monthly basis faxed a request for a wire transfer to another bank. One month, a fax came in, but it was from a fraudster. The bank employee who handled these requests did her job and called the number listed on the fax, but it belonged to the fraudster, and the bank unknowingly sent
Vacations
In the past, examiners required bank employees to take two consecutive weeks off for vacation. The reason is that most embezzlements are discovered while the rogue bank employee is away on vacation or sick leave.
Although this is no longer required, insurance companies prefer that bank employees take at least nine consecutive days off. This equates to one full week with weekends before and after the vacation. At this time, the bank employee is not allowed back in the building. Note, however, that if the vacation rule is not followed, it does not affect a bank's Financial Institution Bond coverage.
In 2009, two TBIAinsured banks suffered employee embezzlements, each nearly
* The most trusted employee in the bank
* A long tenure
* Involved in all areas of the bank
* Lack of internal controls
* Unrestricted access to general ledger accounts
* Took no vacations or returned to the bank during vacations
Audits will not necessarily uncover fraud if the culprit has access to the accounts in question and keeps them hidden.
ATM signage
There are some very busy attorneys in
Although legislation is being considered in the
The newest twist to the ATM situation involves lawsuits filed by blind individuals who find ATMs that are either not
According to a recent article in American Banker, half of the nation's 409,000 ATMs were not
"While settling for relatively modest amounts to date, all these suits require is a single dedicated handicapped plaintiff and a consumer advocate law firm whose primary income stream is statutory attorneys' fees to get going," stated an ABAIS senior attorney.
One individual has hired a law firm in
What can banks do? Banks are advised to take a photograph of their ATMs on a weekly basis to show that the proper signage was in place. Simply download the photos into a bank computer file. Also, check the earphone port weekly to make sure it is in working order, and document the findings in an ATM log.
Customer's computers are being infiltrated by hackers.
"The newest twist to the ATM situation involves lawsuits filed by blind individuals who find ATMs that are either not
Tenured and trusted employees need to follow the nine-days-off rule, too.
The Diebold ADA compliant, full directional decal set
Copyright: | (c) 2012 Texas Banker Association |
Wordcount: | 1120 |
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