Help Is on The Way! House Approves Anti-Fraud Network

Legislation has been approved to create a computer network linking all the fraud databases of state and federal banking, securities, and insurance regulators. Overcoming privacy concerns, the information will include disciplinary and enforcement actions taken against individuals.

According to the report released by the House of Representatives subcommittee, the financial industry estimates the cost of financial fraud at over $100 billion a year. They referred to the Internet creating a "?new frontier for criminals, allowing them to defraud consumers at the mere click of a computer mouse" according to a comment by Michigan Rep. Mike Rogers, who is the author of the bill. Rep. Rogers was an FBI special agent before his election to Congress.

One of the cases that focused the need for exchanging data was the scheme by financier Martin Frankel who allegedly was the major player behind a recent huge insurance fraud. He was working in insurance because he had already been barred from the securities industry due to being convicted of fraud he perpetrated there. Allowing the over 200 separate state and federal agencies to exchange data will make it harder for such individuals to continue their fraudulent activities by moving from one financial industry to another.

The legislation now goes to the full Financial Services Committee. The regulators will have two years to get the network up and running.

Copyright © 2001 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 11, No. 7, 7/01