Senate committee discusses ICBA check fraud concerns

The Senate Banking Committee spotlighted ICBA concerns with how check fraud enabled by large financial institutions and the U.S. Postal Service is affecting community banks and their customers.

ICBA Statement: In a written statement for the hearing, ICBA cited Community Bankers Association of Illinois data showing how large banks and credit unions of first deposit are slow to reimburse for unresolved checks. ICBA noted that check fraud is facilitated by fraudulent accounts opened at these institutions despite the Bank Secrecy Act’s Know Your Customer and Customer Identification Program standards.

Van Hollen Remarks: During the hearing, Sen. Chris Van Hollen (D-Md.) cited community bank concerns raised by the Maryland Bankers Association and CBAI over reimbursement delays and fraudulent account openings at large institutions.

Security Efforts: In its statement, ICBA also cited concerns with Postal Service security, noting the post office is the nation’s biggest source of stolen checks. It said community banks are a critical part of the solution—with their relationship banking model preventing fraud on the front lines and supporting customer education—but strong postal security and cooperation among financial institutions is needed to combat check fraud.

Resources: Amid a dramatic rise in check fraud, ICBA encourages community banks to use:

• Nacha’s ACH Contact Registry, which includes thousands of check contacts.

• The Treasury Department’s Treasury Check Verification System to catch canceled, duplicate, or other problematic Treasury checks at the time of presentment.

• Tips for filing Suspicious Activity Reports from the Financial Crimes Enforcement Network’s alert on fraud schemes.

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