Under Siege From Gangs, Banks Fight Back With Electronic Fingerprints

Nov 19, 2002

Dan Orzech

The economy may be in the pits, but that doesn't mean that an increase in hiring is necessarily good news.

Not if the groups doing the hiring are organized crime syndicates, anyway, and their new recruits are being placed in bank teller jobs, where they are hard at work stealing money from the bank's customers.

That's just what is happening, according to an alert issued yesterday to the nation's banks by the U.S. Comptroller of the Currency, the federal agency which regulates national banks in the U.S.

"Organized gang activity has become more sophisticated," warns Brian McCormally, director of the Enforcement & Compliance Division of the Comptroller's office, in the alert.

Gangs are recruiting people to apply for jobs as bank tellers to gain access to the institution's operating systems and customer information, says McCormally. The gangs typically then give stolen information to the teller, who keys the information into the bank's automated systems so it will appear as if customer visited the teller window -- and then hands the money over to the gang.

Banks usually run background checks on new employees to avoid exactly this sort of scenario. That involves fingerprinting them and sending the prints to the FBI to check for previous criminal convictions.

But that process could take weeks -- longer if the human resources employee taking the fingerprints didn't manage to get a clean print. And during that period, a new, and dishonest, employee could be busily stealing money from a bank's customers.

The cost of a bad hire: One million dollars a day
That can easily damage a bank's reputation. And trust, says John Hall, an official with the American Bankers Association, in Washington, D.C., "is a bank's number one asset."

It can also cost the bank far more money than is actually stolen. Under FDIC regulations, banks which hie someone who has previously been convicted of crimes involving breaches of trust or dishonest acts can face fines of up to $1 million a day, for as long as that person is employed, according to Hall.

So to speed up background checks, some banks have recently begun turning to electronic fingerprinting technology.

One of those banks is Cross Country Bank, of Wilmington, Del., which specializes in issuing credit cards. The bank, which has approximately three million customers, is using a biometric fingerprinting system from Cross Match Technologies, of Palm Beach Gardens, Fla., to electronically scan new employees' fingerprints.

The Cross Match Technologies system scans all ten fingers, and digitizes the prints. Then prints are forwarded to the American Bankers Association, in Washington, D.C., which serves as a clearinghouse for U.S. banks requesting background checks from the FBI. The ABA transmits the fingerprints to the FBI; if the Bureau finds a match in its criminal history records, it contacts the bank directly.

Using the new system, Cross Country Bank "now receives background reports in as little as eight days," says Mike Episcopo, Cross Country Bank's Vice President of Compliance. That's a big improvement on the old process of inked fingerprints on cards, which sometimes took as long as a month and a half.

Union Bank of California, the third-largest commercial bank in California, is also in the process of adopting Cross Match Technologies' system. By electronically scanning prints, the San Francisco-based bank -- which hires some 3,000 new employees a year -- will no longer have to conduct two separate background checks on new employees, says Mark Schmidt, the bank's senior vice president of human resources.

Because of the lengthy turn-around in getting criminal checks back from the FBI, Union Bank was using applicants' social security numbers to conduct pre-hire background checks. After employees were actually hired, the bank would send their prints in to the FBI as well.

The bank now expects to get fingerprint results back within five to seven working days, says Schmidt, allowing it to eliminate the pre-employment security checks. Schmidt expects the cost savings from that to cover the cost of the new technology.

Electronic fingerprinting is also improving the accuracy of the prints. The digital images of the fingerprints cannot be smudged, and the operator can instantly view them on a computer monitor. "The technology allows you to check the fingerprints before they're sent out, so you eliminate all the delays associated with retakes," says Union Bank's Schmidt.

That is making a big difference at Cross Country Bank. "Our rejection rate at the FBI using the paper and ink cards was running as high as 7%. With the new technology, we've dropped that to about 2%, and we're confident we can lower that even more as our operators gain experience in taking prints electronically," says Gary Tabor, a corporate security official with the bank.


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