Pub. 9 2019-2020 Issue 6

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S May • June 2020 13 sounds “official.” They claim that a person can get in on the ground floor and invest in these companies. From there, the company would send some restricted stock to make the person wealthy. They are probably orchestrating a Ponzi scheme or boiler room schemes to perpetrate fraud. • Finally, your institution’s brand might be used in an “alert” to customers stating that their bank account has been temporarily suspended. The victim will receive a link that looks like their bank’s login screen, encouraging them to log in with their banking username and password. In reality, this screen allows criminals to collect the victim’s personal banking information. How Can Institutions Protect Themselves and Their Customers From COVID-19 Scams? While it’s true that the frequency of coronavirus scams is likely to accelerate with the virus itself, it is up to financial institutions to take the necessary steps to thwart them. It is essential to understand that these scams aren’t just a nuisance to your customers; they affect your profits and reputation as well. Use these best practices to ensure your organization and customers stay safe: 1. Identify Vulnerabilities: Organizations must first outline internal vulnerabilities. Based upon an institution’s business model, where do points of entry for scammers exist? Are their customers who are particularly vulnerable to falling victim to scammers? Financial institutions must build controls around the vulnerabilities in their model. Next, they must conduct heightened due diligence on new products and clients, taking extra care with customers who claim to have additional cash flow (both incoming and outgoing) due to the pandemic. Nowmay be a good time to confirm the adequacy of transaction monitoring systems as well. 2. Educate Customers and Employees: Education of staff and customers is critical. Once an organization determines where and how scams can occur, it should inform its staff about red flags and what to look for. Many of these scams are tried and true. Therefore, an institution may simply need to swap out the natural disaster language with pandemic language. This should be added to discussions around the functioning of advance-fee schemes. It is also helpful to train staff and customers to maintain healthy skepticism surrounding new companies addressing the pandemic. This can be accomplished with customers through messaging about protecting themselves from scams as well as addressing proper cleanliness practices. Institutions can also list educational tips on their website. As with most issues, knowledge is power. 3. Stay Calm and Informed: Financial institutions should also stay current on the evolving pandemic and exercise appropriate caution. Although it can be challenging to wade through the ongoing media onslaught, they must remain informed about news in their communities. Keeping an eye on what is happening empowers organizations to determine paths to legitimate support networks. For example, a random email or fundraising phone call could likely be linked to a scam. By contrast, the local school board raising funds to provide free lunches during school closures is likely legitimate. 4. Partner Up: Partneringwith financial crime professionals inone’snetworkwill lead tomore success. Even institution leaders who feel they have seen it all likely haven’t in this case. Opening a dialogue with professional social media contacts, professional organization colleagues or even other community businesses (e.g., the local chamber of commerce or Rotary partners) can be a helpful method to learn best practices. Keeping that ongoing dialogue, along with education and partnership, are great ways to prevent and detect scams. As financial institutions discuss this pandemic, they must remember to look at it through professional eyes and ensure they protect employees and customers. Doing so during these times of stress and misinformation can help them best prevent Coronavirus scams. n Becki LaPorte serves as compliance director for CSI’s Regulatory Compliance Group. She has over 20 years of experience in the financial services industry, including compliance, conducting investigations, developing and delivering comprehensive training, and consulting on program development and implementation. Becki is CAMS and CFCS certified. While it’s true that the frequency of coronavirus scams is like- ly to accelerate with the virus itself, it is up to financial insti - tutions to take the necessary steps to thwart them. It is essen- tial to understand that these scams aren’t just a nuisance to your customers; they affect your profits and reputation as well.