{"id":10633,"date":"2025-02-23T07:12:14","date_gmt":"2025-02-23T07:12:14","guid":{"rendered":"https:\/\/finderica.com\/?p=10633"},"modified":"2025-02-23T07:12:14","modified_gmt":"2025-02-23T07:12:14","slug":"as-internal-fraud-grows-banks-need-more-not-less-regulation","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=10633","title":{"rendered":"As Internal Fraud Grows, Banks Need More, Not Less, Regulation"},"content":{"rendered":"\n
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Boston, USA – June 8, 2012: The facade of a Citizens Bank location in Boston, Massachusetts. … [+]<\/span> Citizens Bank is part of the Citizens Financial Group Inc., and a subsidiary of the Royal Bank of Scotland Group.<\/span><\/p>\n

<\/fbs-accordion>getty<\/small><\/figcaption><\/figure>\n

Banks are not fans of heavy regulation. Few companies or individuals are. Paying attention to rules takes time, effort, and money. Although sometimes unnecessary and overzealous, quite often regulation is the result of companies not operating in ways one might expect them to. In this way, it resembles lawyers\u2019 contracts. Sometimes attorneys put in highly restrictive language because once in earlier parts of their careers there was a situation when something ridiculous or terrible happened and they\u2019re determined that it never will again.<\/p>\n

An example was the indictment of a TD Bank employee<\/a> by the Manhattan District Attorney\u2019s office. The documents alleged that the defendant, who worked in the bank\u2019s anti-money laundering department, gained access to customers\u2019 personal identifying information and then directed people on a Telegram channel to open bank accounts in those names, deposit the checks, and then steal the money. The charges \u201cstemmed from a larger investigation that charged five other individuals in a check fraud scheme that totaled nearly $500,000.\u201d<\/p>\n

An aberration? Not according to a Bloomberg<\/em> report<\/a>, which calls it \u201cpart of a little-noticed pattern\u201d in banks across the country. Public attention often overlooks \u201clowest-paid employees\u201d who sell data as, according to Bloomberg, banks argue that customers have the primary responsibility for not getting conned. But it is the banks who run the systems and grant the permissions for data access. The banks are the entities that would need to put technical measures into place to prevent data theft. It isn\u2019t something customers can do.<\/p>\n

Such issues need attention, but one can perhaps understand why they don\u2019t, given the number of highly irregular activities that periodically happen. Look at Wells Fargo, charged in 2016 with extensive fraud in unauthorized customer accounts, as NBC News<\/em> reported at the time<\/a>. Thousands of employees opened upwards of 2 million accounts without customer permission.<\/p>\n

Then, in 2023 as I previously covered, the FBI and Office of the U.S. Attorney for the Southern District of New York both filed and settled a civil suit against Wells Fargo<\/a> on Monday. The suit alleged that the bank \u201cviolated the Financial Institutions Reform Recovery and Enforcement Act (\u201cFIRREA\u201d) by fraudulently overcharging hundreds of commercial customers, many of them small and medium-sized businesses and federally-insured financial institutions, who used the Bank\u2019s foreign exchange (\u201cFX\u201d) service.\u201d FX is currency trading. The suit claimed the bank defrauded 771 customers by charging higher fees than they said the bank would change.<\/p>\n

Last month, the Consumer Financial Protection Bureau sued Capital One<\/a> \u201cfor cheating consumers out of more than $2 billion in interest payments on savings accounts.\u201d The CFPB alleged that the bank promised that a certain type of account called \u201c360 Savings\u201d provided one of the \u201cbest\u201d and \u201chighest\u201d available interest rates, \u201cbut the bank froze the interest rate at a low level while rates rose nationwide.\u201d Then the bank had a second product called the \u201c360 Performance Savings\u201d that was identical to the 360 Savings except paying out significantly higher interest.<\/p>\n

From small actors to seeming systemic activities, enough banks have shown that they need regulation and more than the large amount that already exists. Or maybe it\u2019s a need for different types of regulation.<\/p>\n

Instead, the administration of President Donald Trump seems bent on lessening regulation by, among other things, effectively neutering the CFPB. Defects in bank regulation aren\u2019t new, as I\u2019ve noted before.<\/p>\n

Instead, there is a deeper question of how government watchdogs, in place and with substantial budgets, keep coming in at the end of problems rather than at the beginning. Compliance is supposed to be an ongoing process of rules developed when too many companies prove they will do what they shouldn\u2019t and then oversight, inspection, and corrective action to keep businesses operating as they should already have.<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Boston, USA – June 8, 2012: The facade of a Citizens Bank location in Boston, Massachusetts. … [+] Citizens Bank is part of the Citizens Financial Group Inc., and a subsidiary of the Royal Bank of Scotland Group. getty Banks are not fans of heavy regulation. Few companies or individuals are. Paying attention to rules<\/p>\n","protected":false},"author":1,"featured_media":10634,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[406,401,992,4324,1614],"class_list":{"0":"post-10633","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-banks","9":"tag-fraud","10":"tag-grows","11":"tag-internal","12":"tag-regulation"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/10633","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10633"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/10633\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/10634"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}