Financial Institutions Up in Arms over New Red Flag Regulations
by Bryan Ansley
While the clock ticks toward the Nov. 1 deadline, 50 percent of U.S. banking institutions are not ready to meet key provisions in the Federal Reserve's Red Flag rules, according to an Information Security Media Group survey.
Over the next two months, financial institutions will be scrambling to reach total compliance or face the regulatory consequences.
To meet the regulation's deadline, the financial community at large will need to call on outside vendors for help. Dreaming about applying an internal solution for each aspect of the rule is no longer an option for most institutions.
Financial institutions are now facing a unique and pressing situation. Already reeling from the mortgage crisis and strong dips in the stock market, banks need help to react and emplace regulatory anti-fraud security measures across their entire organization.
Identity crime is spiraling out of control as every day a new case is in the news. FBI statistics show U. S. companies spend $67 billion annually combating cyber crime; and consumers lose $50 billion to identity theft and recovery expenses every year, according to the Federal Trade Commission.
As part of the Fair and Accurate Credit Transactions (FACT) Act of 2003, the Red Flag rules require all financial institutions to conduct an identity theft risk assessment of their organization and, based on those findings, develop measures to mitigate the risks.
According to a new CA Inc. study, only 8 percent of U.S. consumers say financial institutions and other businesses adequately protect their personal data. And a Unisys corporation survey found 50 percent of households would switch banks for better identity protection.
By strategically implementing policies and procedures required to make safeguarding a customer's identity a top priority, banks can immediately add value and, if they communicate said changes effectively, actually increase non-interest income. It's a win-win.
Secure Identity Systems is the only company in the U.S. that offers the end-to-end solution for Red Flag compliance including: Initial Risk Assessment, Policies and Procedures Manual, New Account Authentication, Change of Address Verification, Identity Theft Protection with fully managed recovery, On-site Staff Training, and an Anti-Phishing Program. For additional information, please call (615) 377-7661, or e-mail: email@example.com.
First published on BankersOnline.com 9/08/08
First published on 09/08/2008