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Financial Institution Letters

Fraud Hotline
Guidance on Implementing a Fraud Hotline
FIL-80-2005
August 16, 2005


Summary: The FDIC is providing guidance to financial institutions on implementing a fraud hotline to minimize potential and actual fraud risks as part of a bank's governance and enterprise risk management program.

Highlights:
  • The FDIC encourages financial institutions to consider the benefits of implementing a fraud hotline as a confidential communication channel to identify fraud and reduce fraud-related losses.
  • The Association of Certified Fraud Examiners – in its "2004 Report to the Nation" – stated that organizations without mechanisms to report fraud suffered financial losses that were more than twice as high as organizations with anonymous fraud-reporting mechanisms.
  • Awareness of the fraud hotline by employees, customers, contractors, service providers, suppliers and other third parties is an important component in ensuring a hotline's effectiveness.
  • Confidentiality of tips reported on fraud hotlines must be guaranteed to ensure that those reporting suspected wrongdoing can do so without fear of retribution or reprisal.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Compliance Officer
Internal Auditor
Fraud Prevention
Personnel/Human Resources
Legal Counsel

Related Topics:
FIL-46-2005 – Pre-employment Background Screening
FIL-17-2003 – Corporate Governance, Audits, and Reporting Requirements

Attachment:
Guidance on Implementing a Fraud Hotline

Contact:
Examination Specialist Kathryn Weatherby at kweatherby@fdic.gov or (202) 898-3673.

Printable Format:
FIL-80-2005 - PDF 36k (PDF Help)

Note:
FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/2005/index.html.

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.

Paper copies of FDIC FILs may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (1-877-275-3342 or (703) 562-2200).


Last Updated 08/16/2005 communications@fdic.gov