When Tellers Are Targeted

A BOL Team Report by Barbara Hurst, Mary Beth Guard, Sam Ott, Carin Eisenhauer and Sharon Lewis

A new regulatory alert says organized gangs are using coercion and threats of bodily harm to persuade individuals to assist them in fraud schemes. In some cases, tellers already employed by financial institutions are being recruited. In the majority of cases, however, individuals are being encouraged by gang members to apply for teller positions at financial institutions for the sole purpose of providing access to the institution's operating systems and customer access information.

What can your institution do to

Protect your existing tellers against coercion and threats from gangs;
Deter and detect this type of fraud;
Spot potential "gang plants" when they apply for teller positions?

According to the Alert, the gangs recruit bank tellers to cash forged savings account withdrawals from customer accounts, and to cash stolen United States Treasury checks. Tellers are reportedly being paid several hundred dollars per transaction to assist in this fraud scheme.

Teller collusion is more common than you think. Lack of supervision and opportunity make conditions ripe for fraud, but good, honest tellers can be one of your biggest assets when it comes to combating the few cheats. Their reputations - as well as that of the bank and the industry - are at stake. Make sure this article is widely circulated within your institution. If your current employees are aware of the attempts by organized crime, they can be on the lookout for it.

The Alert points to two potential problems:

Recruitment of current tellers by the gangs; and
Positioning gang-related people to be hired as tellers.

We have some suggestions for dealing with both scenarios.

Protect Against Recruitment

Don't make it easy for outsiders to know who your tellers are - or to find them outside of work.
Use only first names on name badges and desk signs.
Enforce a strict rule that discarded employee lists or memos with full employee names be shredded so dumpster divers can't gain access to them.
Remind all employees of the necessity to vary the route they take to and from work each day.
Alert all employees to be on the lookout for suspicious behavior and to notify a supervisor or your security officer immediately if they believe gang members are attempting to recruit them or other tellers.
Train your employees on safeguarding against social engineering to reduce the possibility they will inadvertently give out information that may lead to a teller being compromised.
Do not release any information relating to which of your employees are new.
Contact local police and get a briefing on known gang activity. Find out how at-risk your community might be.
Do a check with a Financial Task Force or a gang-related task force to see what advice of information they might be able to provide about activity in your area.
Contact your primary federal regulator and ask if they have determined this fraud is taking place in your jurisdiction.
Consider implementing a new policy for cashing treasury checks - require supervisor approvals for lower dollar amounts.
Consider implementing a new procedure for verification on savings account withdrawals.
Be on the lookout for any obvious changes in a teller's financial situation. If you spot evidence that would appear to indicate the teller has come into an unexplained source of extra cash, follow up on it.
Meet with all tellers and explain the situation.
Establish a signal or signals for a teller to use if they have been contacted or felt threatened and they were concerned that someone was or could be watching them.
Instruct all tellers that the bank security officer or other designated party should be contacted immediately if they received any calls, letters or contacts that seemed out of the ordinary and that might be consistent with this gang activity.
Make sure you have good contact emergency information for each of your employees.

Protect Against Hiring Gang Members

Do thorough background checks on any prospective employee who will be in a cash-handling position.
When interviewing prospective new tellers, ask why they want to work as a teller. Ask if they are seeking this job at the request of any other individual. Whose idea was it? Observe their demeanor as they answer.
Use a reverse lookup on the phone numbers listed as references to see if they really are who the prospective employees say the references are.
Pull credit reports on prospective employees (be sure, however, that you follow the FCRA procedure for giving notice and obtaining the individual's consent). see our article on pulling credit reports for guidance.
Do a fingerprint check.
If you discover the teller candidate previously worked for another financial institution, make a written request to the other institution under Section 355 of the USA PATRIOT Act for a written employment reference. The other institution is not required to provide information about their suspicions of illegal activity, but you definitely won't get it if you don't ask.
If you have had an employee you've dismissed due to suspicions of illegal activity and you receive a call asking for an employment reference but are concerned about voicing your suspicions, Barbara Hurst suggests you consider replying, "I'm sorry, but that former employee's file is with the internal audit department." No need to say more.

Have additional suggestions? Please share!

Alert 2002-4
Subject: Identity Theft: Organized Gang and Teller Collusion Schemes
Read Part II of this article.

First published on BankersOnline.com 04/26/02