To learn more about the ramifications of the Red Flags Rule, you will create a recommendation for an identity theft prevention program for 123 Bank. The program must detect, prevent, and mitigate identify theft in covered accounts, and must include both new and existing accounts. 123 is a banking institution in a small town. It has two branch offices in neighboring towns. The plan should also take into account the size of company.
Identify the warning signs that indicate accounts may have been compromised.
Discuss which warning signs or red flags are of greater importance to 123’s given their size and location. Provide rationale behind your ranking.
For each risk area identified, provide a proposal for how the risk can be mitigated.
Draft a brief summary of your findings.
Some of the Investment brokers, mutual funds and other creditors in bank requires to adopt some identity theft prevention program. Why this is called red flags rule, because its central feature requires financial institution to identify certain practices that are indicators or called “Red Flags” of identity theft.
Banks and creditors must identify practices and feature that are red flag of identity theft; 2nd Develop a program for recognition these red flags when the rises; 3rd make a plan for dealing with red flag ; and lastly 4th update their identify theft program up to date. This four program comes under the relevant federal regulation on the basic o red flag rule
- Detect Red Flags
We should have the list of red flag that signal identify theft in bank. A closer look at these may gap our bank program and processes that will need to be addressed:
A) Obtaining Identifying information and verifying identity
This specifically pertains to the process of verification of a person who has to approached fffor the opening of the new account.
- Authentication transaction for the existing customer
There is we will sure that person who is making a transaction is the true owner of the bank feed information
2 Monitoring Customer Transaction activity
We should concern about debit and credit amount.
B) Prevent and mitigate identity theft with an appropriate response
Red Flag program should provide appropriate responses to the Red Flags detection that is equal with the degree of risk.
The regulation states that may appropriate responses include the following:
- The customer must be contactable
- Covered account should be monitoring for evidence of identity theft
- A new covered account should not opening
- Closing an existing covered account.
- It should Reopening a covered account.
- It should not be attempting to collect or not sell a covered account to a debt collector.
C) Updating the program
Actually criminals gets more creative therefore the existing rule in the program should be change after certain time and periodically or we can say that is must be updated to reduce the risk.