Wire Transfer Via On-Line Banking

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Question:

I have been told that the employees in charge of on-line banking are considering allowing wire transfers through our new on-line banking product. What kind of compliance and security issues should they consider when they are designing this product? We are new to on-line banking so my feeling is that we should learn to crawl before we run. Some of the bigger banks do not have this on-line banking feature. How does our midsize bank think they have the resources and the knowledge to accomplish this?

Answer:

There are some great products available that allow banks to offer a variety of services on-line, however it might still involve a manual process at some point. Here are some ideas surrounding security and regulatory requirements when conducting a wire through an on-line channel:

Ensure your institution has strong CIP procedures, especially if you are opening accounts on-line. Make sure you are comfortable with the identity of the customer before conducting wires.
Make sure the initial on-line sign-in process is strong and will not allow generic passwords (e.g. customers name)
Make sure all wires are filtered through OFAC software
Have some type of account monitoring tool in place to help identify suspicious activity (e.g. unusually large dollar amounts, high risk locations, frequency of wires)
Contact the customer or require a signed form for all wires over a certain dollar level (e.g. $25,000)
Send a confirmation letter to the customer’s address after each wire transaction

First published on BankersOnline.com 1/17/05