Independent Banker - January 2024 - 23

Next: The power of self-awareness 
didn't have to manually enter all of
the information, " explains Boatright.
" It was maybe three to six months
after that they got hit again, but
positive pay caught it. "
3. Work to move customers
away from checks. According to
the Federal Reserve, secure electronic
payment methods can reduce
payment risk for both businesses
and individuals. By moving business
customers to digital channels,
community banks can reduce their
check fraud risks.
" The best way to prevent check
fraud is to stop the checks from
entering the system, " says Kari
Mitchum, vice president, payments
policy at ICBA. " Encourage people to
use other payment channels. You've
got online banking. You've got ACH.
You've got real-time and instant
payments. You've got so many tools to
transition people away from checks. "
It takes a village
While these steps help to mitigate
check fraud, when it occurs, it takes
the combined efforts of the financial
services community, local law
enforcement and the postal service to
bring perpetrators to justice.
" We can help provide solutions
to mitigate risk, but we're the
ones that are going to have to be
proactive in going out there to
not only protect our customers
but protect our own deposits. "
-GARETT BOATRIGHT, FIRST STATE COMMUNITY BANK
To begin that process, financial
institutions need to connect with
one another; however, sometimes
identifying the right contact can
be a challenge. Tools like ICBA
Community, ICBA's digital member
platform, can help community banks
canvass one another for contacts, and
Nacha's ACH Contact Registry, which
has a field for financial institutions
to include check contacts, boasts
thousands of check professionals in
its database.
In addressing fraud, community
banks should also speak with local
authorities for help in identifying
perpetrators and dismantling fraud
rings. " We're all in this together,
QUICK STAT
680K
The number of Suspicious
Activity Reports related to check
fraud reported to FinCEN in 2022
Source: FinCEN
No verification system mandate
for U.S. Treasury checks
In February 2023, the U.S. Department of the Treasury Bureau of
Fiscal Service released a notice of proposed rulemaking exploring
mandated use of the Treasury Check Verification System (TCVS) to
verify that Treasury checks are authentic and valid.
On November 1, 2023, the final rule was published, and as
advocated by ICBA, it included no requirements for financial
institutions to utilize TCVS. However, ICBA encourages its use to
catch canceled, duplicate or other problematic checks at the time
of presentment.
and we have to work with local law
enforcement and postal inspectors, "
Voets says. " We send any check that
we suspect was stolen from the mail
or counterfeited or altered to local
postal inspectors, and we've had
prosecutions. If you don't tell them,
they don't know about it. "
While there's no silver bullet to
end check fraud, by instituting these
action steps, community banks can
better protect themselves and their
customers and bring these fraudsters
to justice.
" We can help provide solutions to
mitigate risk, but we're the ones that
are going to have to be proactive in
going out there to not only protect
our customers but protect our own
deposits, " concludes Boatright.
Colleen Morrison is a writer
in Maryland.
independentbanker.org // 23
http://www.independentbanker.org
Independent Banker - January 2024

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