Thomson Financial Publishing, a unit of Thomson Corp., and the Western Payments Alliance, one of the nation’s largest regional payments organizations, launched FraudBAN, the first online, anti-fraud network for financial institutions. Addressing a problem that costs financial institutions more than $650 million a year, FraudBAN ([http://www.fraudban.com]) is a nationwide information clearinghouse that facilitates real-time data sharing among banks, thrifts and credit unions to thwart check-kiting and other kinds of white collar crime. Perpetrators of fraud frequently use similar phony identification and account information at multiple institutions. Until FraudBAN there has been no commercially available, anti-fraud service for financial institutions.
“FraudBAN’s ability to detect and prevent fraud represents one of the most significant breakthroughs in the war on check and financial fraud in the past decade,” said Glenn Gottfried, Managing Director, Thomson Financial Publishing. “FraudBAN leverages the Internet to create a nationwide clearinghouse accessible to every financial institution any time of the day or night. FraudBAN puts criminals on notice that it will be harder to commit fraud because there is now a powerful new tool to combat fraud through coordinated and immediate action among financial institutions.”
Said CEO Gerard F. Milano of the Western Payments Alliance: “Payments fraud is not the work of small-time crooks, but rather the province of sophisticated criminals who use the proceeds to finance everything from violent crime to terrorism. At a time of heightened security following the events of Sept. 11, FraudBAN strengthens the country’s financial system by enabling institutions to work cooperatively with law enforcement officials to proactively stop fraud.”
Immediate Success For FraudBAN
WesPay and Thomson Financial jointly developed the FraudBAN platform in the WesPay service area over the past two years. With limited participation and utilizing a prototype system, FraudBAN has achieved significant early success. In its initial rollout, FraudBAN identified a large check-cashing ring perpetrated at two financial institutions. The ring used legitimate consumer checks — lost, stolen or discarded check stock — and criminals impersonated bank customers. Check amounts were usually relatively small and under the review thresholds for many institutions. Four suspects were jailed in connection with the case, and the ring has ceased its activity. In addition, more than 4,300 counterfeit checks totaling $21.6 million were attempted against those institutions during that period. The pilot resulted in crime reports being filed with 29 police departments, three sheriff’s departments, and two with federal law enforcement officials. FraudBAN greatly reduces the time and effort necessary for law-enforcement and financial institutions to bring a case to prosecution.
Fraud committed in WesPay’s service area is part of a growing, nationwide problem. According to American Banker, overall fraud at financial institutions rose 32 percent from 1997 to 1999. The American Bankers Association, in its Check Fraud Survey Report in 2000, stated that more than $2.2 billion worth of check fraud was attempted against financial institutions in 1999; actual fraud losses were $679 million.
How FraudBAN Works
To participate in FraudBAN, financial institutions submit payments fraud activity into a secure online central repository. Check, wire transfer, ACH and credit card fraud activity are eligible for reporting. Direct links to payments fraud databases in larger institutions are anticipated. When fraud data is transmitted, FraudBAN searches for matches of names, addresses, account numbers and IDs used in other payments frauds.
Once a confirmed match occurs in the database, FraudBAN automatically sends an electronic alert to participating financial institutions, which then take defensive action. Joint notices to law enforcement on behalf of multiple victim institutions are also prepared. FraudBAN’s ability to aggregate information quickly allows member financial institutions to work together to build a strong case for joint prosecution with law enforcement. Only those institutions providing data to FraudBAN have the opportunity to share information provided by other financial institutions.
Previously a regional service only, FraudBAN is being rolled out by Thomson Financial Publishing to any financial institution across the country. WesPay encourages all members to participate and will automatically enroll members with less than $100 million in deposits in the service. WesPay has more than 1,000 member financial institutions.
Given FraudBAN’s success thus far and increased industry attention to fraud losses, Thomson Financial Publishing expects that more than 1,000 financial institutions will join the network in the next 12 months.
“FraudBAN is a next-generation solution that uses the Internet, as well as the cooperative spirit of financial institutions to crack down on thieves,” Gottfried said. “The greater the participation from financial institutions, the greater the value to every single bank, thrift and credit union in the country. Working together, we can significantly reduce fraud through FraudBAN.”
The Western Payments Alliance is one of the nation’s largest regional payment associations, with more than 1,100 members in the western U.S. and Pacific region. The Western Payments Alliance serves as a cooperative, non-profit organization enabling member financial institutions to efficiently process paper-based and electronic financial transactions. Each day, WesPay collects and clears more than five million checks totaling $7 billion in value. As a NACHA member, the Western Payments Alliance also acts as the rulemaking authority governing member transactions flowing through the Automated Clearing House (ACH). For more information, call 415/433-1230, or visit [http://www.wespay.org].
About Thomson Financial Publishing:
Thomson Financial Publishing (TFP), a division of Thomson Financial’s Banking, Insurance & E-Commerce Group, is a leading provider of regulatory compliance solutions to financial institutions worldwide. TFP products ensure compliance with various regulatory agencies, including the U.S. Treasury’s Office of Foreign Assets Control (OFAC), the Bank Secrecy Act and aid in the detection of money laundering and fraud. TFP also maintains the most authoritative and comprehensive databases of financial institutions. These databases are used to realize higher straight-through-processing rates for payments and to facilitate the repair of rejected transactions. Additionally, TFP facilitates global inter-bank communication and marketing, providing the widest array of print publication and marketing services. As official routing number registrar for the American Bankers Association, TFP issues, retires and maintains a record of all U.S. routing number assignments. For more information, visit Thomson Financial Publishing on the Internet at [http://www.tfp.com] or call 847/676-9600. Thomson Financial’s Banking, Insurance & E-Commerce Group is a division of Thomson Financial, a US$2 billion provider of e-information and integrated work solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (TSE:TOC), a leading, global e-information and solutions company with annual revenues of approximately US$6 billion. The Corporation’s common shares are listed on the Toronto and London stock exchanges. For more information on Thomson Financial, visit [http://www.thomsonfinancial.com].