ABA Bank Compliance - January/February 2014

• Address discrepancies must be detected and verified using the CIP, other data sources, or with the consumer directly after being authenticated; and

• If a continuing relationship is established with the consumer, financial institutions are required to have policies and procedures to furnish the newly verified address to the Consumer Reporting Agency (CRA) as part of the regular reporting process.

4. A consumer report indicates a pattern of activity that is inconsistent with the history and usual pattern of activity of an applicant or customer, such as:

■ ■ A recent and significant increase in the volume of inquiries;

■ ■ An unusual number of recently established credit relationships;

■ ■ A material change in the use of credit, especially with respect to recently established credit relationships; or

■ ■ An account that was closed for cause or identified for abuse of account privileges by a financial institution or creditor.

• These alerts may also come from a non-CRA service provider, such as a fraud detection service.

Suspicious Documents

5. Documents provided for identification appear to have been altered or forged.

6. The photograph or physical description on the identification is not consistent with the appearance of the applicant or customer presenting the identification.

7. Other information on the identification is not
consistent with information provided by the per-
son opening a new covered account or customer
presenting the identification.

8. Other information on the identification is not consistent with readily accessible information that is on file with the financial institution or creditor, such as a signature card or a recent check.

9. An application appears to have been altered or forged, or it gives the appearance of having been destroyed and reassembled.

Suspicious Personal Identifying
Information

10. The personal identifying information pro-
vided is inconsistent when compared against
external information sources used by the financial
institution or creditor
For example:

• The address does not match any address in the consumer report (same as red flag 3); or

• The Social Security Number (SSN) has not been issued, or is listed on the Social Security Administration’s Death Master File.

11. Personal identifying information provided by the customer is not consistent with other personal identifying information provided by the customer. For example, there is a lack of correla-

Case In Point

in a reCent induStry Call on Suspicious Activity Report (SAR) data analysis3, the Federal Deposit Insurance Corporation (FDIC) indicated a 15-percent increase in check fraud from 2012 to 2013. This was partially attributed to password compromises in the 2012 LinkedIn and Twitter hacking attacks and customers that reuse their same login and password for their online banking. Once the fraudster accesses a bank account, he or she often looks for cleared check images to support their counterfeiting operation. One way that banks can prevent this type of fraud would be use of blurring or truncation technology for account numbers and other sensitive images available online. Strong password and multifactor authentication controls are also necessary.