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#23294 - 07/10/02 06:07 PM Callbacks on wire transfers

I would like to know how other institutions expidite a procdure on a call back for wire transfers? Is anyone willing to lend some expertise? Thanks!

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General Discussion
#23295 - 07/10/02 08:13 PM Re: Callbacks on wire transfers
Just Jean Offline
Platinum Poster
Joined: Feb 2002
Posts: 582
We just implemented callbacks for wires. We sent out letters requesting that the businesses that call us with large wires furnish us with a secondary person to verify wires over a certain dollar amount. The business, primary and secondary contact names and numbers are on an excel spreadsheet. When we get a wire request for an amount over the threshold, a person other than the one taking the original request calls a secondary contact person on the list for a verification.

We are a small country bank and we have not had any problems. We didn't have any before but now our auditors are happy too.

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#23296 - 07/10/02 08:54 PM Re: Callbacks on wire transfers
prj Offline
100 Club
Joined: Oct 2001
Posts: 100
Chaska, MN
About 2 years ago, we began our "commercial wire" process. This process takes care of our bond-insurance concerns, while allowing commercial clients (and individuals who are willing to enter into a legal agreement) to originate wires over the telephone. We will not accept phone wire requests anymore unless we have an agreement in place. (of course, certain bank officers are allowed to make exceptions, but they do so realizing that there is uninsured financial risk involved)

The client specifies how they would like callbacks handled as an addendum to the legal agreement. We allow three choices: Call back the originator, Call back another authorized originatr, Call back only "john doe". We verify the identity of the person(s) by a special PIN that we supply to them when we receive the legal agreement. And we will only call back people at the phone numbers indicated on the legal agreement.

All origination and callback conversations are recorded, and archived forEVER (not really, but for a while), and so far, we've stayed out of trouble. (wink)
Pam The comments above are my own thoughts an opinions, not those of my employer.

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#23297 - 07/11/02 03:06 PM Re: Callbacks on wire transfers

We are similar to the above, but maybe a little simpler.

Larger customers are allowed to set a "$ threshold" for receiving a callback. Smaller customers typically dont have this option.

Except in instances of (truly) small businesses, the person initiating the wire doesnt receive the callback; our customer must designate another person to verify it. We provide the verifier w/a code (currently a PIN #) and dont wire anything unless we can reach the verifier (as always, there is an exception process involving our senior mgmt, but, I dont think weve had to use it yet).

We also offer all customers the option of no callback, but, typically, only the "mom and pop" businesses take this option. We did, however, once have a very large customer that didnt like that someone had to wait by the phone to verify the wire before it was sent. It opted for no callback, depsite the fact that its wires could be quite large. So far, so good !

For us, the important thing is to offer customers several options and let them choose whats best for them.

In case anyone is interested in what the "big boys" do, check out the Wells Fargo website at:

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#23298 - 07/11/02 03:51 PM Re: Callbacks on wire transfers
rlcarey Offline
10K Club
Joined: Jul 2001
Posts: 82,125
Galveston, TX

You state: "For us, the important thing is to offer customers several options and let them choose what's best for them."

I would recommend that your bank review UCC-4A and ensure that you are doing what's best for the bank and have established "commercially reasonable" "security procedures".

"Security procedure" means a procedure established by agreement of a customer and a receiving bank for the purpose of (i) verifying that a payment order or communication amending or cancelling a payment order is that of the customer, or (ii) detecting error in the transmission or the content of the payment order or communication. A security procedure may require the use of algorithms or other codes, identifying words or numbers, encryption, callback procedures, or similar security devices. Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer is not by itself a security procedure.

If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if the security procedure is a commercially reasonable method of providing security against unauthorized payment orders.

There is a reason that the "big boys" have agreements with their customers. If you are allowing customers to transfer funds without security procedures - you could be liable for each and every transfer.
Last edited by rlcarey; 07/11/02 03:53 PM.
The opinions expressed here should not be construed to be those of my employer:

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#23299 - 07/12/02 12:56 AM Re: Callbacks on wire transfers
Bear Collector, CRCM Offline
Diamond Poster
Bear Collector, CRCM
Joined: Nov 2000
Posts: 1,830
District of Columbia
We have had a callback policy for wires for clients for years, but our recent Fed exam pointed out the need for callbacks on internal wires as well as external ones. Fraud and misappropriation of funds can occur within your bank as well as from outside. We are currently putting the finishing touches on our internal department wire policy that requires callbacks to the department for wires over a certain dollar threshold. You might want to consider incorporating this into your policy.
Being kind is more important than being important.

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