Study Questions

As mentioned below - the text does a great job continuing the payment process - we will address Security issues in these notes.

In any given day - tellers at most banks can handle thousands if not tens of thousands of dollars in CASH! And, there are tens of thousands of tellers at the thousands of banks. This makes the teller the very MOST likely target of anyone who wants money from the bank they aren't entitled to.

So, what must a bank do - to protect themselves - their tellers and their customers.

First, as is pointed out - the teller - should NEVER do anything that would place either their lives or the lives of their customers at risk. Money can be replaced - a life can't. So DON'T try to be a hero! Honor the robbers demands. At the same time be aware - of as much as you can - of the robber, who else may have witnessed the action and anything else that you can - that would aid in the apprehension of the thief.

Fraud - can occur at the new account desk, the teller line or with a loan officer. Pretending to be someone you aren't - in order to cash a check or make a loan is a way of getting money your not entitled to - without even using any threat. These 'white-collar' crimes are more costly to banks in one year than ALL the robberies that have EVER occurred. Fraud can occur from someone who works for the bank - even easier than from an outside source - since an employee may know much of the system in place to prevent outside fraud.

Money Laundering is an area of great concern for many banks - particularly along the border states. Tellers and new account representatives have a specific duty in this area - to identify and report those customers whose transactions are possibly those of money launders. Transactions in large amounts of cash - from customers not known to have legitimate cash dealings (a retail store, for example) - are an indication of possible problems. Most launders now know that a Currency Transaction Report is required for any cash transaction of $10,000 or more - so that they now try to deposit large sums - that are just below the $10,000 limit. Deposits of $9,500 occurring regularly and maybe at different offices are a reason to be suspicious. Because of the nature of the types of crimes that generate large amounts of currency - many banks have implemented computer software designed to detect patterns of deposits in accounts or groups of accounts that may be indicative of laundering activity. Tellers can help detect these patterns - simply by observing. Is the customer making a $9,000 cash deposit dressed as if they might actually have $9,000 or do they look more they have never made that much money.

One other area that many consumers and their banks have differing viewpoints on - is that of writing checks - before payday. While most everyone may have done it - writing a check without actually having the money on deposit is illegal. Under the Uniform Commercial Code - a customer mush have sufficient balances in their account WHEN they write the check - not just when they EXPECT the check to clear. Known within banking circles as overnight or weekend loans - many customers write checks today - 'knowing' that their paycheck will be deposited tomorrow or on Monday - but since they need the money for the weekend they can get it by cashing a check at the local grocery.

This habit caused quite a problem a few years ago - when the larger grocery chains improved their check collection process cutting one or two days out of the normal collection time. When they first implemented their new procedure - THOUSANDS of San Antonio customers of HEB had bounced checks - and neither the customer or HEB understood why - at first. HEB had no idea so many people wrote checks Wednesday on funds that wouldn't be deposited until Friday. Customers had no idea HEB was changing their process schedule - and so did as they always have done. This created a terrible mess for the Customer, HEB and mostly for the banks - who got all the blame from both the customer and HEB.

The first part of this chapter - should have been combined with chapter 6 - as it is a continuation of the check payment process. Pages 123-132 are important to understand - but the text does a great job of explanation.

Do note - that even though the bank has tremendous liability issues in dealing with accounts - that the Customer - also has a duty. If the customer does NOT fulfill their obligations to help the bank properly service their accounts - the banks obligations to the customer are reduced. Review page 130 "Customer's Duty to Examine Statements".

ASSIGNMENT:

There are a number of methods for which a bank must protect itself from loss due to theft, fraud, extortion etc. What exposure to loss exists in your area - and without specific detail - what safeguards are in place to protect your bank from loss? Remember to include the URL's from resources your bank could use to help in this process.

Research paper must be emailed to the instructor by Friday of the ninth week of classes.