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Red Tape Tangles Phishing Investigations
Wednesday, July 04, 2007 (1261 reads)

Do you wonder what law enforcement is doing about phishing? Certainly they’re investigating these attacks. Occasionally we hear about fines and convictions for crimes that occurred years earlier. In the meanwhile, the attacks and losses from phishing keep rising – to $100 million per year.
To learn about our law enforcement efforts, I called Special Agent Martin McBride, who investigates computer crime for the FBI. Mr. McBride took me through the typical steps of a phishing investigation and it was eye opening, to say the least. Here is the   chronology of a typical FBI phishing investigation:
Someone alerts the Bureau that a phishing attack is under way. The FBI requests the phishing e-mail from the person who made the complaint, then examines the e-mail to determine where a respondent would go. This will be a fraudulent version of the bank’s Web site.

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Community Banks and Small Businesses
Wednesday, July 04, 2007 (1470 reads)

What’s a community bank?” The question surprised me. I had always thought of the business owner who asked it as quite knowledgeable. At first, I couldn’t believe he was serious. But he was.
After thinking about it, he was asking a good question. With all the changes going on in the banking industry, he was looking for clarification.
In many ways, it’s not easy to spot a community bank, since most banks offer just about the same services. Sometimes a bank’s name is a clue to its identity. For example, “Stoneham Savings Bank” is a fairly clear indication that this may very well be a local – a community – bank.

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Compliance: A Condition of Employment
Wednesday, July 04, 2007 (1850 reads)

Most financial institutions have policies in place for specific areas setting limits that, when exceeded, can lead to suspension or the termination of employment (e.g. too many teller differences, overstepping one’s loan authority, even poor attendance and other general employee behavior issues). But why is the expectation of compliance not included in most institution’s policies? Why omit such an important element when ultimately its absence could be the downfall of an effective compliance program?
The Office of the Comptroller of the Currency’s former Bank Secrecy Act (BSA) Handbook stated that senior management is responsible for ensuring an effective system of internal controls for BSA and must demonstrate its commitment to compliance by, among other things, “making BSA compliance a condition of employment” and “incorporating compliance with the BSA and its implementing regulations into job descriptions and performance evaluations of bank personnel.” The FDIC’s Compliance Examination Procedures state: “Key actions that a board and management may take to demonstrate their commitment to maintaining an effective compliance management system and to set a positive climate for compliance include demonstrating clear and unequivocal expectations about compliance.”

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Why Deposit Patterns Matter
Wednesday, July 04, 2007 (1307 reads)

Checking accounts have traditionally been the bread and butter of banking. Through transaction accounts, banks generate 40 percent to 70 percent of their fee income, and give themselves a base from which to cross-sell other financial services.
Most financial institutions today have an overdraft or courtesy pay program. These programs automate the decision to pay or return a check when there are insufficient funds (NSFs) in an account and pay up presented items to a standard overdraft limit. Further notices and other follow-up activities are executed at standard intervals to get repayment of overdraft funds from overdrawn accounts. This is the typical profile of most overdraft programs today.

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The Importance of BSA/AML Programs
Wednesday, July 04, 2007 (3203 reads)

Why establish an enterprise-wide Bank Secrecy Act/Anti-Money Laundering (BSA/AML) program? Similar to the industry’s approach to addressing credit, market and operational risk, effective control of BSA/AML risk calls for coordinated risk management to control money laundering and terrorist financing risk. An enterprise-wide BSA/AML compliance program coordinates regulatory requirements throughout an organization, across affiliates, activities, business lines or legal entities inside a larger risk management framework.
While there are currently no regulatory requirements for holding companies or lead financial institutions to adopt an enterprise-wide BSA/AML compliance program, many organizations view this as an effective tool in managing BSA/AML risks. (The lead financial institution is generally the largest financial institution in the holding company structure in terms of assets unless otherwise designated by the holding company.)

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