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Bank Fraud - How
Safe Are you?
(With apologies to our
U.S. readers, the author uses the Canadian and U.K. spelling for
"cheque" - instead of "check".)
Cheque fraud is on the
increase in Canada and the U.S. If you issue cheques to
suppliers, employees or anyone else, you are vulnerable.
Cheque fraud is
perpetrated using a number of techniques, including:
-
Creating counterfeit
cheques
-
Altering the cheque
amount
-
Altering the payee
name
-
Forging authorized
signatures using stolen blank cheques
For example, a Toronto
company recently had a cheque intercepted in the mail, the payee
and amount were altered, and the MICR coding was changed to
reflect a different cheque number - all professionally done. And
of course it had the authentic original signature.
So how do you avoid
being the victim of cheque fraud? Let's address this from two
perspectives - firstly some physical and commonsense do's and
don'ts, then some technology options.
Basic precautions:
-
keeping all
cheques securely locked away, including paid cheques
returned by the bank, and signed cheques waiting to be
mailed
-
use cheques with
embedded security features
-
do not use window
envelopes - if the contents of the envelope are less
obvious, the cheque is less likely to be intercepted
-
Separate duties
between employees
-
Review and reconcile
bank statements regularly and promptly
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Use alternatives
such as on line banking (bill payment options), wire
transfers and direct deposit to reduce the number of cheques
you issue
If you nevertheless have
to issue a high volume of cheques, it may worth making use of
technology options offered by most banks. These include:
-
Electronic matching
services - where your records and the bank's are
electronically compared and discrepancies are flagged for
follow-up (see below for an example)
-
Outsourcing your
payables - many banks offer a service whereby you transmit
your payables to them, in electronic format, and the bank
pays your suppliers using whatever method the supplier
prefers - cheque, wire transfer, etc.
Sharon Kuzma, a senior
manager with Bank of Nova Scotia, points to the Scotiabank
Positive Pay service as an example of an electronic matching
service. Here's how it works: each time you issue cheques, a
data file is transmitted to the bank with details of the cheques
issued. The bank automatically matches cheques presented with
this file, and exceptions are communicated immediately to you
for investigation.
Most banks offer these
services, although of course there is a cost attached. And if
you decide to go down this route, you need an Accounts Payable
system capable of generating the appropriate data file to send
to the bank (and for the benefit of Blue Link users, yes - we do
provide this).
If you have any
questions or comments relating to cheque fraud, please email
info@bluelink.ca - any
interesting responses may be published in a future Business
Solution.
Tech Corner
Spyware
Spyware resides on a large and increasing
percentage of home and business computers. Even if you do not
know what Spyware is, trust me - you do not want any on your
system. There are several anti-spyware software options out
there, but if you've not yet implemented one, consider
downloading the Microsoft Anti-spyware beta from
http://www.microsoft.com/downloads/details.aspx?FamilyID=321CD7A2-6A57-4C57-A8BD-DBF62EDA9671&displaylang=en
- it works, and at the moment it's free.
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