Currently we are rearranging our wire responsibilities and updating our policies and procedures. Right now we allow customers to request wire transfers via phone fax or email if they can supply us with required CIP information. Is this to risky? Should we be taking more extra precautious steps or is this something we should'nt be doing at all except for special circumstances or exceptions? Are there any best practices guidelines that I can be referred to?

Financial Insitutions' bottom line is "customer satisfaction and customer retention"..... that's why certain FI would go out of their normal practices to provide special services or accomodate their practices to their customers needs....

To minimize the risk in wire transfers keep in mind the following:

--Dollar amount limits
--Funds transfers agreement on file (signed by customer)
--Specific instructions about wires (how often,callbacks,authorized employees,dual signatory..)
--It would be better to perform wire transfers via FAX..
--If email is used as a method of communication (review the Electronic Act for applicability)
--Limit Phone wires only to well known and established customers.
--Train employees on all required steps (NO EXCEPTIONS)

At my Bank, we perform wire transfers via FAX, and ONLINE (online banking)...

I would like to add that if you are accepting wires by fax, that some type of callback procedure is implemented. It's very easy to 'lift' a signature from some other document and copy it in order to make it appear to be a legitimate wire request.

We'll accept faxed instructions, however, we will not send the wire out until we are able to get verbal confirmation by contact the customer with the information provided to. (It would be pointless to contact them on the number provided on the fax).

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We'll accept faxed instructions, however, we will not send the wire out until we are able to get verbal confirmation by contact the customer with the information provided to. (It would be pointless to contact them on the number provided on the fax).

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GREAT POINT!!!!

Most of the time, CSRs tend to bend the rules and skip important steps (such as Callback). It would make no business sense to contact customers at any other number other than what's on the file.

Proper training on all procedures is the KEY to minimize any risk.

You may want to implement a PIN based number for your customers. For customers calling in, we require a PIN or testkey, and callback on any wire over 25k. We require a callback on all faxes, regardless of the amount. It is to a number listed in our CIF for the customer. No exceptions to this are allowed, from the Chairman on down. We also require a funds agreement, and we will not deviate from it.

This should be covered in your account agreement and even in a separate funds agreement where you can offer your customer a security procedure for wire requests received when the customer isn't physically present. Call backs to a number on file is one such procedure, PINs are another, so are tokens. The important step is to offer a procedure that the client can either accept or reject. The law specifically states that signature verification by itself is not a commercially reasonable security procedure. If you do, it's at your risk, which you might take on small wires, but definately not on the bigger ones.

Latitude 21 is correct. No commercially reasonable security procedures in place support by a written agreement and you will take the loss on any wire that a customer comes back says was not authorized. The UCC specifically states that "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."

Also, don't forget to consider just who is on the callback, at the bank and at the customer's location. Allowing a bank employee to control a wire from end to end (or a customer's employee to do so) is a risky procedure. You want some separation of duties here.