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Hang Together or Hang Separately

Barbara E. Hurst, Editor

One of the troubling questions raised by Security Officers at the BANKERS' HOTLINE Workshop in Philadelphia last week was the effect the Privacy legislation and translation is going to have on the exchange of information to combat fraud. We know that fraud has reached an all time high, just from talking to the security officers. Losses on single cases, even in small banks, are no longer $500 or less. One bank brought along the story of their $138,000 loss on a single case - in one week. This is becoming much more common.

The FBI told us months ago that fraud is on the increase, and that organized crime groups have become much more sophisticated and active. The need for communication between financial institutions to fight fraud losses is greater than ever.

We would hope the legislators and regulators did not have the intention of inhibiting our ability to do our jobs. But the way our bank attorneys are applying the restrictions on the privacy issue borders on paranoia. We have heard from security officers who have been frustrated in investigating, recovery, and prosecution efforts because after they file the Suspicious Activity Report, and realize that their own institution is the victim of a large loss they call the local authorities to pursue apprehension and prosecution. The local guys come in or call and say they want to see the records that are referred to in the SAR, and the financial institution's lawyers say they can't see them without a subpoena!

At this point the security officer will TRY to explain to the bank's attorney that when the SAR is filed, it's as if the documents and records were filed along with them, and it's perfectly OK to turn over the records to law enforcement without a subpoena. But some of our attorneys are very stubborn people, and the security officer's explanation is ignored.

Now law enforcement says, with good reason, "Take a hike and investigate your own darn case." (Note: That statement has been edited...a lot!)

We'd like the regulators to come out and tell us that we can still investigate and share information on criminals. I don't know if any of them will go that far out on the limb. We'd like to think security officers can continue to do their job without fear of the privacy compliance issue blowing up in their face. If we complain enough, before losses go so sky-high they close some financial institutions down, maybe we'll get some cooperation out of Washington. If we don't, and the privacy issue continues in the direction it seems to be going, the security officer's ability to do his or her job could be history. Let's face it, as Benjamin Franklin said, "We must indeed all hang together, or, most assuredly, we shall all hang separately."

Copyright © 2001 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 11, No. 5, 5/01

First published on 05/01/2001

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