RBI suggests preventive measures for cheque related fraud cases
Updated: Nov 07, 2014 02:44:16pm
Mumbai, Nov 7 (KNN) To help banks deal with cheque related fraud cases, the Reserve Bank of India has outlined some preventive and precautionary measures.
“The rise in the number of cheque related fraud cases is a matter of serious concern. It is evident that many of such frauds could have been avoided had due diligence been observed at the time of handling and/or processing the cheques and monitoring newly opened accounts.
“Banks are, therefore, advised to review and strengthen the controls in the cheque presenting/passing and account monitoring processes and to ensure that all procedural guidelines including preventive measures are followed meticulously by the dealing staff/officials,” the apex bank said in a notification of November-5.
Some of the preventive measures banks may follow in this regard are: ensuring the use of 100 per cent CTS - 2010 compliant cheques; strengthening the infrastructure at the cheque handling Service Branches and bestowing special attention on the quality of equipment and personnel posted for CTS based clearing, so that it is not merely a mechanical process.
Banks should also ensure that the beneficiary is KYC compliant so that the bank has recourse to him/her as long as he/she remains a customer of the bank; examine under UV lamp for all cheques beyond a threshold of say, Rs 2 lakh; check at multiple levels, of cheques above a threshold of say, Rs 5 lakh, the RBI said.
The central bank has also indicated that there should be close monitoring of credits and debits in newly opened transaction accounts based on risk categorization; and sending an SMS alert to payer/drawer when cheques are received in clearing. However, it said the threshold limits mentioned can be reduced or increased at a later stage with the approval of the Board depending on the volume of cheques handled by the bank or it's risk appetite, stating that the list is only indicative.
In addition, banks should consider certain preventive measures for dealing with suspicious or large value cheques (in relation to an account’s normal level of operations). These include - alerting the customer by a phone call and getting the confirmation from the payer/drawer; and contacting base branch in case of non-home cheques.
These measures should be resorted to selectively if not found feasible to be implemented systematically. It has been reported that in some cases even though the original cheques were in the custody of the customer, cheques with the same series had been presented and encashed by fraudsters. In this connection, banks are advised to take appropriate precautionary measures to ensure that the confidential information viz., customer name / account number / signature, cheque serial numbers and other related information are neither compromised nor misused either from the bank or from the vendors’ (printers, couriers etc.) side.
Due care and secure handling is also to be exercised in the movement of cheques from the time they are tendered over the counters or dropped in the collection boxes by customers, RBI said. (KNN/ES)
“The rise in the number of cheque related fraud cases is a matter of serious concern. It is evident that many of such frauds could have been avoided had due diligence been observed at the time of handling and/or processing the cheques and monitoring newly opened accounts.
“Banks are, therefore, advised to review and strengthen the controls in the cheque presenting/passing and account monitoring processes and to ensure that all procedural guidelines including preventive measures are followed meticulously by the dealing staff/officials,” the apex bank said in a notification of November-5.
Some of the preventive measures banks may follow in this regard are: ensuring the use of 100 per cent CTS - 2010 compliant cheques; strengthening the infrastructure at the cheque handling Service Branches and bestowing special attention on the quality of equipment and personnel posted for CTS based clearing, so that it is not merely a mechanical process.
Banks should also ensure that the beneficiary is KYC compliant so that the bank has recourse to him/her as long as he/she remains a customer of the bank; examine under UV lamp for all cheques beyond a threshold of say, Rs 2 lakh; check at multiple levels, of cheques above a threshold of say, Rs 5 lakh, the RBI said.
The central bank has also indicated that there should be close monitoring of credits and debits in newly opened transaction accounts based on risk categorization; and sending an SMS alert to payer/drawer when cheques are received in clearing. However, it said the threshold limits mentioned can be reduced or increased at a later stage with the approval of the Board depending on the volume of cheques handled by the bank or it's risk appetite, stating that the list is only indicative.
In addition, banks should consider certain preventive measures for dealing with suspicious or large value cheques (in relation to an account’s normal level of operations). These include - alerting the customer by a phone call and getting the confirmation from the payer/drawer; and contacting base branch in case of non-home cheques.
These measures should be resorted to selectively if not found feasible to be implemented systematically. It has been reported that in some cases even though the original cheques were in the custody of the customer, cheques with the same series had been presented and encashed by fraudsters. In this connection, banks are advised to take appropriate precautionary measures to ensure that the confidential information viz., customer name / account number / signature, cheque serial numbers and other related information are neither compromised nor misused either from the bank or from the vendors’ (printers, couriers etc.) side.
Due care and secure handling is also to be exercised in the movement of cheques from the time they are tendered over the counters or dropped in the collection boxes by customers, RBI said. (KNN/ES)
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