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Question & Answer
Question: At one of your workshops in Nebraska you talked about banks not needing bait money anymore. Could you please tell me where that came from. I'm having a hard time convincing my auditor to cut back on bait money. Our tellers really don't like it, and we're presently using $500 per drawer.
Answer: The new Bank Protection Act regulations that came out have changed the wording on what financial institutions are required to do. Basically, there are only seven absolute requirements-three major and four minor ones. The major ones are (1) "...to adopt appropriate security procedures to discourage robberies, burglaries and larcenies and assist in identifying and apprehending persons who commit such acts"; (2) that a "...written security program ... is developed and implemented"; and (3) "…that a report must be made at least annually to the board of directors on the implementation, administration, and effectiveness of the security program."
The four minor ones are under security devices. They require you to have "(1) A means of protecting cash or other liquid assets, such as a vault, safe, or other secure space; (2) A lighting system for illuminating, during the hours of darkness, the area around the vault, if the vault is visible from outside the banking office; (3) Tamper resistant locks on exterior doors and exterior windows that may be opened; and , (4) An alarm system or other appropriate device for promptly notifying the nearest responsible law enforcement officers of an attempted or perpetrated robbery or burglary."
All the above are written as requirements (e.g., "The board of directors SHALL designate a security officer", "The security program SHALL establish procedures for opening and closing for business", "Each bank SHALL have, at a minimum, the above listed four security devices.")
The regulation goes on to state under the creation of the written security program, that each bank SHALL "...establish procedures that will assist in identifying persons committing crimes against the bank and that will preserve evidence that may aid in their identification or conviction; such procedures MAY include, but are not limited to:
"(i) Maintaining a camera that records activity in the banking office;
"(ii) Using identification devices, such as prerecorded serial-numbered bills, or chemical and electronic devices; and
"(iii) Retaining a record of any robbery, burglary or larceny committed against the bank."
This has been translated by security experts to mean there are certain things that MUST be done, and others that MAY be done, but are not required. You are not required to maintain cameras, or use dye packs … or maintain bait money.
The wording by all the regulators (Federal Reserve, FDIC, OCC, OTS) is the same in this section. You'll find it right now under Minimum Security Procedures at FDIC and OTS, under Minimum Security Devices and Procedures at OCC, and under Regulation P (Fed). As of October 1, 1998, Regulation P will become part of Federal Reserve's Regulation H. Reg P will be no more.
Copyright © 1998 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 8, No. 9, 9/98
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