"Increased convenience for the customer usually means increased operational risk for the Bank"
Transfers of funds between accounts
There are many methods for customers with multiple accounts to transfer funds between accounts. These include customer initiated with no bank personnel involved such as ebanking ATM, automated telephone access and customer initiated with bank personnel involved methods such as fax and call into the branch. This article will consider the basic operational controls needed when bank personnel are involved in the transaction.
Any time bank personnel are involved in the transfer of funds a number of control issues come into play. These include:
Is this person a signer on the accounts or authorized in writing by the signer?
How have we identified the person requesting the transfer?
Are there enough funds in the "from to" account to avoid an overdraft?
If personal accounts, are the accounts of similar name or do they have the same address?
If business accounts, is there an agreement that clearly lays out the authorized personnel and the accounts.
If faxed, should we have a call the customer policy?
Is there a report available to identify all of these transfers the next day?
Are these transfers called back with supporting documentation using the next days report?
Are there account transfer limitations per REG D?
Is the telephone transfer process audited by internal audit?
There are telephone transfer applications that require most of these issues to be addressed or the transfer will not be allowed. However if your institution does not have one of these, consider a transfer request form in order to document what was requested, by whom, and when. This form will be used as the call back source document the next day and should include the following elements:
Name of requestor
From account
To account
Amount requested
Funds available in from account
ID of requestor
Signature card/authorization checked
Account names and addresses checked
Prepared by
Approved by
Don't let the traditional phone be a source of fraud for your institution. If you transfer funds to an unauthorized account and those are withdrawn, life will not be fun at your branch for quite a while. Create or improve your telephone and fax control features now.
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Gene Bucciarelli, MBA CPA is the principal of Internal Control Systems, a community bank auditing and consulting firm. He can be reached at genebucc@aol.com and 925.828.7360.
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