The NAFCU Journal March-April 2020 - 16

source," says Alex Hernandez, vice president of emerging technology at cybersecurity, cybercompliance and cyber fraud
specialist DefenseStorm. "They got money
transferred out through multiple attempts
of leveraging multichannel attacks."

patterns of behavior and relationships
across channels "to provide predictive
power where fraud may be occurring,
and a much faster reaction when fraud is
seen, because all that data is consolidated
in one place."

Low-tech and paper check fraud continue, and it's not only new members who
are the perpetrators. Existing members
encountering hardship might try to kite a
check - when, for example, John Smith Jr.
will falsify his identification to draw money
from John Smith Sr.'s account.

At the convergence of cybersecurity and
fraud, cross-training and improved collaboration allow teams to leverage shared
information and understand each other's
worlds, "so if and when something does
happen, they have already spent some
time together and already understand
each other," Hernandez says.

PREVENTION MINDSET

All fraud schemes exploit an institution's
weakest link, and many credit unions
don't deploy available protections or
preventive policies to strengthen their
defenses, Davidson says. Many still allow
"chip-magstripe fallback," allowing bad
actors to pretend that a fake chip is malfunctioning and complete transactions
with the magnetic stripe. Others don't
use Positive Pay to confirm clearance of
their own business checks.
Still others allow lax authentication procedures in their shared branching networks.
In one case, a fraudster used his credit
union HELOC to withdraw $168,000
from another credit union in the network.
"Would you, as a network member,
allow someone to take out $168,000
by just showing their driver's license?"
Davidson says. "I don't think so. For
2020, it's all about authentication,
authentication, authentication."
Fraud detection tools that focus on
single channels have blind spots, so
Hernandez's DefenseStorm analyzes

The holistic approach often reveals
storylines across departments, Davidson
says. If different sections are investigating ACH, wire, card and paper check
fraud, "you're never going to catch the
bad guy who's the same perpetrator hitting all those different transaction risks."
RBFCU convenes a multidisciplinary fraud
team quarterly. "It's been all hands on deck,"
says Santos. "The fraud department is not
going to solve all the problems. We need
everybody working together."

EMPLOYEE COMPLIANCE

While much of the fraud suffered by
credit unions is from outside the
institution, officials must also look
internally, assuring that every employee
follows policies, procedures and
regulatory requirements.

fraud and risk mitigation, Jackson says.
Working with its own risk committee,
the board adopts policies and procedures
regarding acceptable forms of identification - no exceptions allowed.
"You have to have a reasonable agreement
that the person in front of you is who
they say they are," she says.
Within strict verification parameters,
frontline employees must be empowered to trust their guts and hit the pause
button. At Century Federal, they call it
"going up the ladder" when a transaction
is paused because something, or someone, seems suspicious or could trigger a
loss to the credit union.
"That can be enough to deter a bad actor,"
Jackson says. "That person has [headed]
out the door, because someone has
referred it up the ladder."
Century Federal's "go up the ladder"
mindset played a role in halting a case
of elder financial abuse, which is a
type of fraud on the rise. Tellers sounded
the alarm when an older member came
in on a cold day, wearing a windbreaker
and no socks, with her granddaughter.
Because of their alertness, law enforcement uncovered the granddaughter's
physical and financial abuse of
her grandmother.
Santos' department alerts staff, via
intranet, to potential threats and instills
a "trust, but verify" mindset.

"If you are a teller, you work for the
federal government," Jackson says. "The
Patriot Act is part of that."
Century Federal's board leverages compliance for added strength in addressing

"I say I have 2,000 employees in the fraud
department," Santos says. "It's every
person's job to look for fraud and report
that. There's no 'somebody else will get

''

I say I have 2,000 employees in the fraud department.
It's every person's job to look for fraud and report that.
There's no 'somebody else will get that.' I tell them not to
rely on decisions I have made in order for them to make
decisions regarding this member.

''

- JAMES E. SANTOS, VICE PRESIDENT OF ACCOUNT SERVICES, RANDOLPH-BROOKS FEDERAL CREDIT UNION
16

THE NAFCU JOURNAL  MARCH-APRIL 2020



The NAFCU Journal March-April 2020

Table of Contents for the Digital Edition of The NAFCU Journal March-April 2020

The NAFCU Journal March-April 2020 - Cover1
The NAFCU Journal March-April 2020 - Cover2
The NAFCU Journal March-April 2020 - 1
The NAFCU Journal March-April 2020 - 2
The NAFCU Journal March-April 2020 - 3
The NAFCU Journal March-April 2020 - 4
The NAFCU Journal March-April 2020 - 5
The NAFCU Journal March-April 2020 - 6
The NAFCU Journal March-April 2020 - 7
The NAFCU Journal March-April 2020 - 8
The NAFCU Journal March-April 2020 - 9
The NAFCU Journal March-April 2020 - 10
The NAFCU Journal March-April 2020 - 11
The NAFCU Journal March-April 2020 - 12
The NAFCU Journal March-April 2020 - 13
The NAFCU Journal March-April 2020 - 14
The NAFCU Journal March-April 2020 - 15
The NAFCU Journal March-April 2020 - 16
The NAFCU Journal March-April 2020 - 17
The NAFCU Journal March-April 2020 - 18
The NAFCU Journal March-April 2020 - 19
The NAFCU Journal March-April 2020 - 20
The NAFCU Journal March-April 2020 - 21
The NAFCU Journal March-April 2020 - 22
The NAFCU Journal March-April 2020 - 23
The NAFCU Journal March-April 2020 - 24
The NAFCU Journal March-April 2020 - 25
The NAFCU Journal March-April 2020 - 26
The NAFCU Journal March-April 2020 - 27
The NAFCU Journal March-April 2020 - 28
The NAFCU Journal March-April 2020 - 29
The NAFCU Journal March-April 2020 - 30
The NAFCU Journal March-April 2020 - 31
The NAFCU Journal March-April 2020 - 32
The NAFCU Journal March-April 2020 - 33
The NAFCU Journal March-April 2020 - 34
The NAFCU Journal March-April 2020 - 35
The NAFCU Journal March-April 2020 - 36
The NAFCU Journal March-April 2020 - 37
The NAFCU Journal March-April 2020 - 38
The NAFCU Journal March-April 2020 - 39
The NAFCU Journal March-April 2020 - 40
The NAFCU Journal March-April 2020 - Cover3
The NAFCU Journal March-April 2020 - Cover4
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