SAN ANTONIO – In a sense, Randolph-Brooks Federal Credit Union was ahead of the game when the Patriot Act rolled out. “Interestingly enough, we were already looking at fraud detection,” explains Charlotte Norton, vp/member services. “We were not using CheckFree or anything like that as part of the new account opening process. We were only doing credit scoring. Based on the credit history, we assumed the account would behave in a certain way.” However, the credit union was seeing some fraud, including fake information. With 220,000 members and 800 SEGs, it was difficult to know members individually. Then, with the Patriot Act, the credit union realized it would have to beef up member identification. Late last year RBFCU decided to use Patriot Act Connection from Bankers Systems in St. Cloud, Minn., to carry out what Norton calls “a much deeper scrub.” Patriot Act Connection is browser-based and provides immediate feedback. The Risk Assessment module and ID Flag option alert the credit union when inconsistent information indicates a need to investigate further. A basic risk assessment, which simply verifies member identification, costs 30 cents. A more intensive ID Flag, which the credit union runs each time a credit score is below 550, costs $4. The cost has been “very noticeable,” Norton says. On the other hand, it may well be justified. “When we tested it (Patriot Act Connection) against some of our known fraud accounts, it was interesting that it provided flags that could have been looked into when the accounts were opened,” Norton said. In some cases the birthdays given in two records didn't match. In others the address provided was not listed in any public record. When a problem arises, the credit union asks the member to explain why a Social Security number doesn't match the name, for example. If there is a reasonable explanation, the opening of the account can move forward. If the member can't explain, the credit union may ask for proof of Social Security number, address or other data. “In some cases they never come back,” Norton says. “It's been a nice fraud deterrent. We have not opened some accounts we might have opened before.” Feedback from branches indicates the process has been transparent to members and has not really slowed the process of opening accounts. Norton notes most of the information required under the Patriot Act would have been requested anyway. It's simply confirmed against known data. If anything does stir member concern, it's the fact RBFCU runs credit checks. A member may protest they don't want the credit union to call up their score. They know they have bad credit. The credit union simply explains the member's credit standing affects what the credit union can offer that member. “Although it hasn't impacted our account opening process, the Patriot Act is one more thing to be concerned with, one more regulation,” Norton says. “We have to keystroke data twice – first into Patriot Act Connection, then into our system to actually open the account. We are looking at ways to key in one area and automatically populate another. We talked to Bankers Systems about it, but in this case the solution is going to be more on our side.” On the plus roster, the credit union has been able to stop printing copies of items to prove Patriot Act requirements were verified. Earlier this year Bankers Systems improved their process so they can maintain an archived image. In addition, as RBFCU has gained experience it's no longer necessary for red flags to be taken to the manager level. -

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