Topic: Fraud
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If a customer makes an “X” for her signature on her account agreement (due to a stroke), is that a legal signature on the account agreement?
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. Yes, we believe the customer may mark an “X” as her legally binding signature. From…
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Aside from filing a SAR, is there any other reporting we are obliged to do if we receive a mortgage loan application with what we believe to be fraudulent information — falsified tax returns, bank statements, etc.?
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We believe your bank should file the SAR, and management should report the filing to your Board of Directors. The FDIC's rules state the following about additional reporting at 12 CFR 353.3(b)(2) and 353.3(c), as follows: (b)(2) In situations involving violations requiring immediate attention, such as when a reportable violation is ongoing, the bank shall…
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Can a check deposited in a business account be endorsed over to the business or does the check deposited in a business account have to be made out to the business itself and not endorsed over to the business?
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There are some risks in accepting checks that were endorsed to your customer by the payee of the check. Whether a check is made out to an individual or to a business entity, the bank may be risking liability to the payee of the check when allowing a customer to deposit such checks, as discussed…
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Can you provide information regarding the proper steps a bank should take if we suspect a borrower of mortgage fraud?
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The Illinois Criminal Code specifically prohibits mortgage fraud, defined as making “any false statement or report . . . with the intent to influence in any way the action of a financial institution to act upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, or loan.” 720 ILCS 5/17-10.6(d). (This offense was added…
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What rules apply when a business customer seeks restitution from a bank after an employee of the customer stole money from the customer’s deposit account? In this case, an employee forged checks that were made out to “CASH.”
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Employees who make checks out to “CASH” present a special problem that has been addressed in several Illinois cases. These cases have held that banks are potentially liable for failing to detect forgeries when employees cash out checks drawn on his or her employer’s account that are made out to “CASH.” See, e.g., Mutual Service…
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A customer gave his debit card and PIN to his girlfriend. We had erroneously linked the debit card to the customer’s savings account, but he had asked that it be linked only to his checking account. His girlfriend used the card to steal money from the customer’s savings account. Will we be liable for the loss?
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Although the transaction you describe might be considered an authorized transaction, it is not likely that you can hold the customer liable because he did not request or validate the link to his savings account. Because the transaction involved a transfer from a savings account made with a debit card, Regulation E governs the customer’s…