Bank frauds are not new. Dormant account frauds are almost always carried out by a few insiders. If a staffer is involved in an embezzlement of Rs.50 lakh, how else you can term him other than a bankster (blend of banker and gangster). Money and crime always share a nefarious nexus. A banker looting the customer funds is like a police robbing.
A savings account/current account is considered as inoperative account if there are no transactions in the account for over two years. Dormant account results from a variety of reasons: death of a customer who has failed to update his legal heirs the requisite information, failure by account holders to notify their bankers in the event of change of address, the fact of the account-holder himself having forgotten about the existence of an account opened many years before, or cases in which a person has opened an account in the name of another without informing the latter person (eg. Account opened in the name of minor by his parents/grandparents). Depositing aside money for a rainy day ...... and then forgetting about it; senior citizens affected by Alzheimer disease...
All of us have savings banks accounts, at times end up having many. Tracking of multiple accounts often breeds confusion. Ignoring a bank account for a long time can cost time, money and also the accompanying agony.
While frauds are committed even in operative accounts, it is no wonder such frauds are happening in inactive accounts. The reason is that in case of inactive accounts, the constituents do not come to know immediately that a fraud has been perpetrated, as they do not track the account regularly. Moreover, maintaining such accounts increases the overall cost for the bank. Banks need to maintain the database of dormant accounts, which increases the cost. Also, it requires manpower which can be used elsewhere.
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It is learnt that a mind-numbing amount of about Rs.2,500 crore is lying as unclaimed deposits. The largest stash of unclaimed money is in savings bank accounts of nationalised banks amounting to Rs.425 crore in 8.7 million accounts.
The fradulent staffer tampers with the inactive accounts by executing or authorising scores of fraudulent entries. When a few customers became aware of unauthorised activity in their accounts, s/he corrects the “errors” by depositing funds from other customer’s accounts. Then s/he sends letters to the customers reporting that there had been an error in their accounts and falsely note in the bank database that the accounts had been “corrected” and the customers notified.
Although most dormant accounts have small balances, those with larger balances are tempting targets for dishonest employees. A Teller or other bank insider authorised to access these accounts simply need to make debit entries and steal the money. Because the legitimate account holder is not monitoring the account, there is little chance the fraud will be detected (in a few cases, the legitimate account holders are deceased).
A similar version of this embezzlement involves external fraudsters who intercept the bank statements that arrive at the address from where the legitimate account holder has moved. If funds are available in the account, the fraudsters can use the account information to commit identity fraud by posing as the legitimate customer and withdraw the funds.
What to do?
Spare a few minutes to verify the entries appearing in your statement. Promptly notify the change of address and ensure you get the acknowledgement to the new address. Though you have ATM and online banking facility, visit your branch periodically. Share all the bank details to all your family members. Close the unwanted accounts rather than merely abandon them, as it is easy to monitor minimum number of needed accounts. Destroy unused cheques from inactive accounts.
The bank audit team has a special and serious role to play. The team should always make surprise visit, as some banks still give sufficient notice before the visit which alerts the insiders. The latter defeats the very purpose of audit. We receive many cold calls from bank sales team regarding credit card, home loan, auto loan etc., whereas they extend secondary treatment to customers if account is about to become “inactive”. If the bank shows little concern to inform processing either by SMS, phone or email (all of these), frauds can be reduced. An autogenerated email advice appears suffice from management’s perspective, where the personal touch and courtesy is missing.
Preventive and positive measures from the banks' reach is imperative apart, proactively protect yourself from the predators. After all, the value of money is better appreciated when it is not there!
Happy banking!
Happy banking!
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Also read: http://kmurthy608.blogspot.in/2014/08/bank-frauds-are-direct-attacks-on.html
Your feed back is welcome at: krs1957@hotmail.com
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