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Fraud Hotline Guidance on Implementing a Fraud Hotline

BSA/AML, OFAC and Fraud
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 

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

Additional Related Topics:

  • FIL-46-2005 – Pre-employment Background Screening
  • FIL-17-2003 – Corporate Governance, Audits, and Reporting Requirements
Attachment(s)
Guidance on Implementing a Fraud Hotline

Last Updated: August 16, 2005