Medallion Signature Guarantee Stamp Security
Answer by Barry Thompson, BOL Guru BIO AND CONTACT INFO
Question: What are the security issues on how our bank's investment center should safeguard the Medallion Signature Guarantee Stamp that they possess? Are there any rules or regs on dual control of the stamp? What are your suggestions on how the stamp should be handled and who should have authorization to handle it.
Answer: This is a dangerous stamp to have just floating around your office. The Medallion Signature Guarantee Stamp began with the securities industry years ago. At that time if someone in the securities field guaranteed a signature and it was a forgery they automatically paid the loss. For many years, institutions like savings banks signature guarantees were not recognized by the securities industry. The Medallion program was designed to allow anyone possessing the Medallion stamp to guarantee a signature. If the signature turns out to be a forgery your institution will be expected to pay the loss.
The Kemark Companies are responsible for this program and you can read more about them at http://www.kemark.com/programs.html. When your institution instituted the Medallion Signature Guarantee Program Kemark sent a package of information. The person having this information most likely will be the person who reports to Kemark on the usage of the stamp or your program coordinator.
The steps I recommend are the ones established by myself when I had this responsibility. I know of no formal or written steps to follow other than the ones that I developed.
The information provided by Kemark explains the liability associated with a loss of a stamp or one used fraudulently. My advice is to copy that information into a packet to be given to anyone having a stamp assigned to them.
Assign the stamp to a specific person who realizes they are solely responsible for it. The package from step 1 explaining the program is given to the person.
Each holder of the medallion signs a statement that they are responsible for the security of the stamp.
Have each holder of the stamp keep a record of when and what documents they guaranteed with the stamp. The form could have columns for customer name, security, and face amount of the security. This form may have been developed by your Kemark program coordinator.
Each year conduct a quick inspection to see that those responsible for the stamps have them in safe keeping. After confirming the stamp is being properly cared for have them sign a new statement from step 3.
BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. Advertisers and sponsors are not responsible for site content. Please help us keep BankersOnline FREE to all banking professionals. Support our advertisers and sponsors by clicking through to learn more about their products and services.