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Dual Control for Deposits by Mail

Question: 
We have always had dual control on incoming mail. We are now merging with another Bank and they are acting like they have never heard of such a thing. We receive customer deposits and payments in the mail. Every now and then, someone mails cash. What do you think?
Answer: 

Answer by Dana Turner, BOL Guru

What you are referring to is dual custody during reconciliation, a process under which two individuals are present when deposits are received. It is an essential fraud protection measure that should be used not only for incoming mail, but also for your night drop and ATM reconciliation. If you have established sound dual custody reconciliation procedures for your night drop and ATM reconciliation, you can easily alter those to handle incoming and outgoing mail. This is an important procedure that should not be discontinued after the merger.

And yes -- maintaining dual custody regarding mail is a common practice that's usually implemented only after the institution takes a huge loss.

Answer: 

Answer by Barry Thompson, BOL Guru

Mergers always bring about conflicts with competing philosophies. Many times this situation revolves around the concept of Risk Avoidance vs. Risk Management. In your situation, the argument could be made that the bank is trying to avoid risk vs. assessing the potential loss of money with the cost of two people opening mail. In other words, how big a loss could we take vs. the cost of having two people opening mail.

My view has always been that you open anything that pertains to money with dual control. In medium to small banks when this question is raised I always bring out one more argument. If one person is opening mail, how much time does this give them to read confidential mail? Presidents and Senior Officers wouldn't like having the mail room read sensitive communications.First published on BankersOnline.com 2/5/01

First published on 02/05/2001

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