Strong change control processes coordinated between the institution and customer can help to ensure synchronized RDC platforms, operating systems and applications, and business processes. In substance, RDC is similar to traditional deposit delivery systems at financial institutions; however, it enables customers of financial institutions to deposit items electronically from remote locations. Remote deposit capture (RDC) refers to the ability to deposit a check into a bank account from a remote location, such as an office or home, without having to physically deliver the check to the bank. Risk Management: Measuring and Monitoring. The financial institution’s business continuity plan should address RDC systems and business processes, and the testing activities should assess whether restoration of systems and processes meets recovery objectives and time frames. This is typically accomplished by scanning a digital image of a check into a computer, then transmitting that image to the bank. The complexity of the risk identification and assessment process will vary depending on the scope of RDC implementation and exposures faced by the institution. In addition, reporting on reject items and corrections, and CAR/LAR/ICR adjustments supports monitoring of operational efficiency. Management should incorporate their assessments of RDC systems, including products and services, into existing risk assessment processes. Financial institutions should develop and implement risk measuring and monitoring systems for effective oversight of RDC activities. Effective management oversight involves regularly reviewing the reports and periodically conducting reviews and operational risk assessments. This analysis was developed to document the risks and controls necessary to implement and operate Remote Deposit Capture. Other areas: ACH Audit, Third Party Senders, Direct Access, High-Risk Activities; Remote Deposit Capture (RDC) Risk Assessment. Faulty equipment, inadequate procedures, or inadequate training of customers and their employees can lead to inappropriate document processing, poor image quality, and inaccurate electronic data. 91 0 obj <>stream Similarly, forged or missing endorsements, which may be detected in person, may be less easily detected in an RDC environment. Velocity metrics such as file size and number of files, transaction dollar value and volume, and return item dollar value and volume also assist in monitoring for fraudulent activity and capacity utilization. Foreign correspondent accounts are subject to due diligence requirements prescribed in regulations issued pursuant to the USA PATRIOT Act amendments to the BSA. Reply Thanks! It is popular among peers I have shared it with. The financial institution should evaluate potential risks and regulatory requirements under Bank Secrecy Act laws and regulations when designing and implementing RDC. Comprehensive contracts and customer agreements should identify clearly the roles, responsibilities, and liabilities of all parties in the RDC process to minimize exposure to legal and compliance risks. Check alteration, including making unwarranted changes to the Magnetic Ink Character Recognition (MICR) line on the image of scanned items, may be more difficult to detect when deposited items are received through RDC and are not inspected by a qualified person. The Information Security Booklet of the FFIEC IT Examination Handbook provides further guidance in these areas. There also may be risks related to Web application vulnerabilities, authentication of a customer to the RDC system, and encryption used at any point in the process. You must enter a search term before you press the Search button. Although deposit taking is not a new activity, RDC should be viewed as a new delivery system and not simply as a new service. 0 Remote Deposit Capture (RDC), a deposit transaction delivery system, allows a financial institution to receive digital information from deposit documents captured at remote locations. Risks associated with fraud are not unique to RDC; however, certain aspects of fraud risk are elevated in an RDC environment. Contracts and agreements should be appropriate for the institution’s specific RDC environment and should identify clearly each party’s roles, responsibilities, and liabilities. Contact Member Support for discounted pricing on multiple downloads. This will help ensure that the monitoring and reporting process accurately reflects current policies and procedures and sound practices. Risk Management of Remote Deposit Capture Background and Purpose. These risks can be unique to each customer’s location, RDC processing technology, and information security systems. This document is provided as a guide, you may identify additional risk/threats during your analysis. The report will be presented in an easy-to-read electronic matrix that allows for you to add your execution strategy and completion date before presenting it to your Compliance Committee and/or Board of Directors. management should assess the risks associated with how and where nonpublic personal information is captured, transmitted, retained, and destroyed. Remote Deposit Capture Risk Assessment Workbook (ELECTRONIC), Updated to include Mobile Remote Deposit risks, this comprehensive, easy-to-use Remote Deposit Capture Risk Assessment Workbook is designed to assist Financial Institutions in addressing remote deposit capture risk. In general, implementing RDC in the institution’s backroom operations may present less risk and complexity than deploying RDC at remote locations, such as customers’ business premises or homes, where the capture process is outside the direct control of the institution. As with other financial services, RDC may not be. FFIEC Guidance: Risk Management of Remote Deposit Capture • Customer awareness of RDC systems and education about associated RDC risks are effective deterrents to the online theft of assets and sensitive information. They should ensure that RDC is compatible with the institution’s business strategies and understand the return on investment and management’s ability to manage the risks inherent in RDC. It can be hard for financial institutions to stay up-to-date with RDC guidelines and impending risks. In the typical RDC process, original deposit items are not submitted to the financial institution but are retained by the customer or the customer’s service provider. RDC operations may be included in the institutions “enterprise-wide” information security risk assessment or assessed individually. User-friendly worksheet questions are easily answered Yes/No and include room for comments, along with a designated action plan to assist you in developing a comprehensive RDC risk management program. When a financial institution sends the deposited items, in either electronic or paper form, to another institution for collection or presentment, it should consider the risks it takes under the Check Clearing for the 21st Century Act (Check 21 Act), Regulation CC, Regulation J, applicable state laws, or any agreements or clearinghouse rules. Management should establish key operational performance metrics that support accurate and timely monitoring of risk within RDC processes. A financial institution may determine that risks associated with RDC warrant greater customer selectivity than the risks associated with traditional deposit services and may choose to reduce and control those risks by limiting the availability of this system. While financial institutions have been including this product as a part of their commercial product offerings, it is not uncommon to see this product offering being made to the consumer customers as well. During the assessment, your RDC staff will receive custom education and solutions to ensure you have sufficient controls in place. Because of this ever-changing payments landscape, it is critical that financial institutions understand their risks and build a management program to control them. PAR will perform a comprehensive ACH risk assessment that will help safeguard your financial institution from potential loss. Operations staff, risk managers, compliance officers as well as audit personnel will find this workbook a useful tool. Remote Deposit Capture (RDC), the digital processing of paper checks and monetary instruments at remote locations for deposit and clearing through the check (image) or ACH networks, has expanded rapidly in recent years and is being used at financial institutions and at customer locations. Reply 5 Thanks! For each clearing method, the financial institution should consider applicable legal and regulatory requirements, such as timing and amount of funds availability, as well as the timeframes for handling returned items. h�bbd``b`��@�� H0��r��$���~ �`� Without effective periodic training, RDC customers may have unrealistic expectations of the system or may not understand their roles in managing risks and monitoring for processing errors or unauthorized activity. RDC can decrease processing costs, support new and existing banking products, and improve customers’ access to their deposits; however, it introduces additional risks to those typically inherent in traditional deposit delivery systems. To the extent possible, contingency plan development and testing should be coordinated with customers using RDC. May 16, 2014 . The all-inclusive federal banking compliance advisory service owned by 30 State Bankers Associations - staffed with attorneys, former auditors and compliance specialists; all with banking experience and the know-how to keep your team's knowledge fresh in the ever-changing regulatory landscape. Remote Deposit Capture Risk Assessment Template [RDC-RDCRA] - This template is provided as a guide in developing the institutions risk assessment of RDC operations. RDC Compliance Risk Assessments. There are; however, Remote Deposit Capture risk management standards provided by the FFIEC Guidance. When insurance coverage is available and cost effective, institutions may be able to mitigate risk further. This is typically accomplished by scanning a digital image of a check into a computer, then transmitting that image to the bank. For example, for the various technological options. The … Join industry leaders in shaping and influencing U.S. payments. Report content should be structured to meet the needs of the various levels of management. This template was helpful and does a good job of outlining the risks of RDC and the mitigating controls. Management should establish appropriate risk-based guidelines to qualify customers for this service. Duplicate presentment of checks and images at the institution or another depository institution represents both a business process and a fraud risk. In addition, the financial institution should review available reports of independent audits performed at the customer location related to IT, RDC, and associated operational processes. endstream endobj 80 0 obj <> endobj 81 0 obj <> endobj 82 0 obj <>stream During these visits, the institution should evaluate management, operational controls and risk management practices, staffing and the need for training and ongoing support, and the IT infrastructure. Additional due diligence may be necessary where there is evidence that the RDC capture device is in a foreign location, or when a customer has been otherwise identified as being high risk. Financial institutions should understand the separate rules and liabilities and consider them in the risk assessment. Reports should address point-in-time activities as well as trends for individual customers, groups of customers with similar characteristics, and for the RDC product as a whole. The Remote Deposit Capture Risk Assessment Workbook guides you in completing the step-by-step risk assessment.
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