Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-07-14
WAYS OF CHECKING
BANK FRAUDS TOLD
Prize Essay Winner Tells OF
Methods Used in Detect
ing Crooks.
BY Il. A. FLEMING.

by the D. B. A. for competitive es-
says, the three having the highest
marks emitting the writer's to attend
the recent convention at Montauk
Point, l.. l., as guests and TO read their
essays and to have them published in
! the records of the association.
Certainly there could be no more in
teresting problem offered, as the banks
need protection continuously to COM
bat the crooks and hold-up artists
who are constantly trying to get the
| better Of banks.
| The American Bankers Association
engages one of the leading detective
bureaus continually to follow on the
trail of crime against banks from the
inside and the outside also. Each
! month the record Is made public, CIV
| ing the number of various crimes COM
mitted, the number of arrests, number
convicted. released and awaiting trial,
together with pictures of crooks, res
leased. time served and. in so far as
possible, photographs of those badly
wanted and facsimiles Of signatures.
Must Trust Some One.
1t Is necessary that banks trust some
| employees. and these are generally
chosen for the most important posi-
tons having to do with the control of
cash and securities. All banks, for
their further protection, carry blanket
mortgages. insuring the banks against
losses, and special policies against en-
ployes holding the more responsible
positions.
Every little while the lightning
strikes from out of a clear, cloudless
| sky, and the story is told of a trusted
employe gone wrong. causing surprise
and not a little CONSERVATION. usually
resulting in. the banks making plans
to prevent future delinquencies along
the line of operations pursued by the
latest unfaithful one.
| A banks chief source Of income is
from interest on its loans. Most banks
have perfected a system whereby they
get every cent Of interest money paid
over the counter. Today bankers dread
new methods OF getting away with the
long green, usually finding their as
surance in the blanket bond-which Is
recognized as worth all 1t costs
| At least one large bank makes q
point of gathering deposit slips every
| little while from receiving tellers, so
that when the day is ended the money
must balance with the slips and a
record Is kept In duplicate of checks
! deposited.
A record Of loans is made. Of the
| interest payable. Of the date due and
the final disposition Of 1t. No chance
| for any crookery there. The note teller
does not keep this record.
But TO the Winning Essay.
Miss Catherine 3. Krieg. one Of the
secretaries and employees of long stand
| ing in the Riggs National Bank. won
the contest. and with the second and
| third prize winners had the pleasure
| of being guests Of the association and Of
reading their papers before the con-
vention. Miss Krieg has held many
important positions in the bank. and,
being observant made her views prac-
teal and instructive.
She recommends first a campaign Of
eternal vigilance by the personnel OF
! the banks: second. closer cooperation
between national. state and local pro-
tective associations. and third. educating
the customer in fraud prevention.
Checking accounts are characterized
as an open sesame" to svindlers.
ut behooves the banker tn move
cautiously In initiating transactions
with a prospective client and an actual
| relationship should be established only
after identification either through q
good customer or BY satisfactory
bank or credit reference. In opening
corporation accounts an authentic eX-
! tract of bylaws and certified copy of
the minutes Of the meeting authorizing
the officials signing against checks on
the account to act In the capacity
designated should be requested. In
case of trustees the bank should require
certified copy Of the court order
ministrator relationships, letters tesla
mentary and letters Of administration
respectively"
How J. B. Forgan Does 1t.
The leading national bank of Chicago
over which the late j. B. Forgan pre-
sided for many years. arranged that an
application for checking account priv
tlegeS should be made to one of the
executives secretaries and that before
approval applicants that passed Secre-
tarial inspection we're accorded a few
minutes interview with the president
himself. Following an Affirmative reply
whan the applicant left the bank he
was trailed for time and the slightest
inaccuracy between statements and
trailer's reports would lead to elini-
nation of the checking account. When
the bank reached its latter-day size
this method might become obsolete.
Miss Krieg urged extreme caution In
the department of information regard
ing accounts and balances and in dis
tributing bank books and checks. In
quirers about balances and Cancelled
checks should be required to sign APP
plication, while the application is sent
to the proper department for identi-
f1catjon. Check books should be fur
nished on receipt of the customer ano
the proper identification of his sig.
nature.
Monthly Account Statements.
Not all banks have this very bother.
some problem offered to them, Tor 'hc
reason that many do not lender &c.
have customers leave deposit books al
the bank for balancing and return q
duplicate checks.
! The moduS operandi of the crook fr
this instance Is for the crook to remove
the envelope containing the Cancelled
checks from the Nail box. trace the sig
nature from the Cancelled check and al
the same time obtain the information
as to the balance carried by the GUS
toner. Vouchers and statement are re-
placed In the envelope and returned u
the mail box and the depositor has nc
idea of the tampering. This is hin.
dered by lock boxes and boxes at pos
offices.
4 The essayist advises that statements
and Cancelled checks be forwarded ir
separate heavy envelopes, addressed by
the addressing machine rather than BY
the window type of envelope, nor should
it contain return to" with the bank:
name, but rather the lock box number
of the bank on the reverse. A fine lec-
ommendation that would BOTHER lh'
thief.
Cashing checks for a stranger, &C.
cording to Miss Krieg's opinion. shoulc
be absolutely certain of identity, anc
an oficer authorizing payment shoult
also be- sure and put safeguards against
worthless paper. Consistent dep 'Sit and
withdrawal of identical amounts by q