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Handling Fraudulent Accounts

What is the best approach to take if someone tries to open an account who:<br><br> 1. Is the subject of a fraud alert we just received through an outside source?<br> 2. Appears to be using false identification? One time, our system indicated the real owner of the social security number was deceased. Another time, the ID didn't match the standard form for the state the guy came from. We also had one where we could tell the drivers license had been altered and a new picture put in.<br> 3. Is on the OFAC list?

Answer by Barbara Hurst

If you KNOW for a fact that this person is not a person you want to have an account at your bank - for whatever reason - it's good for you to realize the law says you do not have to open an account for every applicant. You have a right to choose your customers the same way your applicants have a right to choose a financial institution. You have a new account APPLICATION. This person is simply filling out an application for an account. There is no guarantee he or she will get one - and you have the right to refuse it.

Having said that, I know it's easy to know that fact, but tough to put into practice. There are a couple of things you can do. One is to just out and out refuse the account. "I'm sorry, sir, but I can't open that account for you. We do not choose to service your account." Period. The problem is doing this on a face-to-face basis. It's not only difficult to do, but you also must be really, really careful not to make discriminatory remarks, e.g. "I can't open that account for you because we got a call from another bank telling us you are a dead-beat who deposits phony checks!" That type of refusal is definitely NOT a good idea!

The second method may be easier. (Initial HINT - Giving out the starter kit is not a problem as I assume you just ran out of them…………)Take the deposit, give a receipt for the deposit, but DO NOT put the deposit through the work. (Once the deposit goes through the work and is posted to the account, you no longer have an applicant - you have a customer. Big difference.) If cash is used, convert it to an official (tellers) check payable to the applicant. Any check used for the initial deposit can be simply returned. After the person has left the office, you can immediately write to the address given and refuse the account, returning the opening deposit. Your letter should say no more than something like: "We regret to inform you that we have chosen not to service an account for you at this time. Accordingly, we are returning the opening deposit that accompanied your application in the amount of $______. Very truly yours," Send the letter certified - return receipt requested. We always found it easier to have someone behind the scenes sign the letter instead of the person in the branch who may have to take the heat of the return visit. I can't say enough times, you must be very, very careful not to be discriminatory in your remarks. "The decision was made not to service your account." End of story. No explanation at all. If one is asked, just shake your head (sadly, if you wish!) and repeat, "The decision was made not to service your account." After two or three repeats, the applicant will get the message.

If you know for a fact that the applicant is an imposter, your best bet would be 911. At the very least, stall long enough and hold on to the identification tightly enough (while you are making copies of it) for the imposter to get nervous and leave without it. We've found this to be the pattern in every case.

OFAC has a number where you can reach them, and before you put that application through the work you should talk to the folks in Washington to determine whether or not your applicant is indeed on their list. If they are one and the same, OFAC will want to know about it. You can reach them at 202-622-2490


Answer by Dana Turner

The best, overall approach to handling s known or suspected fraud event in progress is simply to call your local law enforcement agency (use the agency's business line first, please) and tell the dispatcher that you have a possible fraud in progress at your institution. The dispatcher should send a uniformed patrol officer to meet with you and the "customer" to investigate the event.

  • There are multiple answers to this issue that depend upon the nature of your "outside source". If it's a law enforcement bulletin, call the agency that issued it for assistance. If it's a fraud reporting company, follow the company's written guidelines. If it's a "rumor", investigate further on your own and refer your findings to the Security Officer for review.
  • The mechanism used to commit a crime isn't the important issue here -- there are literally dozens of ways to commit fraud. The legal standard called "probable cause" that entitles a law enforcement officer to investigate, detain or arrest a person involves "facts or circumstances which would lead a reasonable and prudent person to believe that:
  • A crime has been, is now or is about to be committed; and
  • That this is the person responsible."

If you have developed the belief that both issues are true, call your local law enforcement agency immediately for assistance.

First published on 3/19/01

First published on 03/19/2001

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