Pub. 6 2011-2012 Issue 1

www.nebankers.org 10 Extraordinary Service for Extraordinary Members. SECURITY OFFICER’S BY-WORD T RANSFERRING FUNDS FROM ONE account to another—for exam- ple, savings to checking—does not present a problem for the bank IF the same person or persons are authorized to withdraw funds from the savings account as from the check- ing account. The problem for the bank occurs when a person who can withdraw from the checking account is NOT autho- rized to withdraw from the savings of the funds taken by the other person from the checking account on which theywere authorized towithdraw funds were stolen from the savings account and they are the responsibility of the bank. Sometimes this can be a very large amount of money claimed by the heirs after the elderly person has died. The bank always loses. There is no cov- erage for this type of loss in the bank’s Financial Institution Bond. Neither the Internet Bond nor the Voice-Initiated Wire Transfer coverage will cover this type of loss. The other most common loss in this area is the transfer of funds from the parents’ account to a son or daughter’s account. The children are not authorized to write checks on their parents’ account so they go online or call the bank on the phone and ask for funds to be transferred to their account. The bank makes the transfer; the children spend the money; the bank must reimburse the parents’ account for the illegal trans- fer. Children do forge their parents’ signatures on checking accounts. Children now make illegal transfers from their parents’ accounts. The bank has another non-insured loss. Yes, there is a way to set up such transfers by phone or via the Internet. The bank must have in its file a pre- authorized statement that funds may be transferred from a certain named account to a certain named account, regardless of who can withdraw funds from the second account. The problem will be an unauthorized personmaking the phone or Internet transfer from the first account. Generally speaking, transfers by phone or Internet should never be made unless ALL the same persons are authorized on both accounts. Z Internet Transfers Can Be Expensive Donald M. Towle , President, Kansas Bankers Surety Co. account. This happens most often in the case of elderly people who allow someone else on the checking account to assist them in current expense pay- ments; however, ONLY the elderly person can withdraw from the savings account. The bank receives Internet instructions or a phone call asking that funds be transferred from the savings account to the checking account be- cause the elderly person’s name is on both accounts. If the elderly person did not actuallymake the authorization, all Internet or telephone instructions to transfer money from one account to another have caused banks numerous losses during the last few months. For more information, please contact Kansas Bankers Surety Co. at (785) 228-0000.