How Bankers Can Prevent Liability Claims

Every bank and financial institution is subjected to liability lawsuits. Like any other business, its daily operations can leave them on the hook for claims of negligence, error, and the like. As no one is immune to these exposures, Banker Professional Liability insurance should always be carried. In addition, educate your staff on these common issues that have the potential to create serious liability claims.

New accounts.

Banks also incur a great deal of litigation in the new accounts area. Actions taken by new accounts personnel can sometimes be the difference between catching a fraud before it starts and taking large losses because of a fraud. Taking the time to ensure that your procedures are in place and are being followed can pay huge dividends in the event of litigation, explains Cathy Ghiglieri of the NorthWestern Financial Review.

If a new client opens up a corporate account, always verify documentation and reference the Secretary of State to ensure they are legitimate company with real directors and officers. Follow the Bank Secrecy Act to prevent fraud from occurring!

ATM transactions.

So many customer transactions can be done at the ATM now, so ensure your bank has proper fraud prevention procedures in place to detect it. For example, if a customer is withdrawing the maximum amount each day for 5 consecutive days, when they typically just use their ATM cards, this is the time to raise a red flag and contact the customer to ensure they haven’t lost their card or had it stolen.

Large checks.

This is a common recurring theme for banker litigation. In many instances, the large checks are processed with fraudulent signatures or fraudulent endorsements, and, if reviewed by the bank, would be considered “unusual activity” for that account. Because banks look at very few signatures and endorsements, or large checks for that matter, this type of fraud is not often detected, states the article. Implement a review process to cross reference signatures as a means to mitigate fraud in your bank. 


About FGIB

Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for financial entities, in addition to providing crime insurance and general business insurance products to a number of firms across the United States. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (877) 485-4413 to speak with one of our professionals.