Protecting Your Brand

1
Protecting Your Brand

• Your brand is essential to doing business but
  are you protecting it?

2
Mutual Fund Fraud

• Fraud Trends
• Check Fraud
• Money Laundering
• Terrorist Financing
• ID Theft

3
Fraud Trends

• Annual losses from check fraud and counterfeiting
  will exceed 10 billion
• -National Check Fraud Center
• It is estimated that 85 billion checks will be
  processed and more that 731 million will bounce.
• -Ernest Young

4
Fraud Trends

• 83 of the reported fraud incidents to the ICI in
  2001 involved checks.
• 71 of the stolen checks were credit card
  convenience checks.

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Types of Check Fraud

• Check Kiting
• Forged Signature
• Altered Checks
• Counterfeit

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Check Kiting

• The process of depositing a check from one bank
  account to a second account, and then back to the
  original account without sufficient funds to
  cover the original check.

7
Forged Signature

• A legitimate bank check with a fraudulent
  authorized signature

8
Altered Checks

• Information on legitimate check changed to allow
  for fraudulent investment. Usually payee or
  check amount. Checks are easily washed of ink
  through over the counter cleaning agents.

9
Counterfeit Checks

• The fastest type of fraud due to the availability
  of color copying, printing and scanning equipment.

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Counterfeit Checks
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Top 10 Indicators an Account Could Be Fraudulent

• No broker of record on the account
• Address is a PO Box or PMB
• Variance in name of client and check payee
• Money market fund
• Checkbook / ATM / Internet Redemption requested
• Cash equivalent received
• Credit card convenience check received
• Invalid social security number on application
• No legitimate phone number on application
• And the number 1 indicator

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Top 10 Indicators an Account Could Be Fraudulent

• Address on check does not match the address on
  the application

13
Current Fraud Hotspots
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Money Laundering Terrorist Financing
October 23, 2001 President Bush signs the USA
PATRIOT Act
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Movement of FundsSeptember 11
Mustafa Ahmad (U.A.E)
5,000
5,400
5,200
Mohammed Atta (USA - FL)
Marwan Al-Shehhi (USA)
Waleed Alshehri (USA)
Cash transfers to Florida from Dubai were used to
purchase cashiers checks in small denominations.
On Sept 8 and 9 transfers were made of alleged
surplus funds.
Cashiers Checks
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USA PATRIOT Act

• Prohibitions on shell banks
• SAR requirements for financial inst.
• Anti-Money Laundering Compliance Programs
• Customer Identification Program

17
Suspicious Activity

• RED FLAGS
• Transactions lack business sense.
• Customer linked to possible violations
• Customer refuses to provide important information
  about account
• Use of cash equivalents, structured transactions
• Lack of concern regarding market risk,
  commissions or transaction costs.

18
Identity Theft

• I am Tiger Woods.

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Identity Theft

• Woods' identity thief gets 200 years-to-life
• SACRAMENTO, Calif. (AP) -- A man who used Tiger
  Woods' identity to steal 17,000 worth of goods
  was sentenced to 200 years-to-life in prison.
• Anthony Lemar Taylor was convicted of falsely
  obtaining a driver's license using the name
  Eldrick T. Woods, Woods' Social Security number
  and his birth date.
• Though he looks nothing like golf's best player,
  the 30-year-old Taylor then used the false
  identification and credit cards to buy a 70-inch
  TV, stereos and a used luxury car between August
  1998 and August 1999.

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Identity Theft

• Open new lines of credit
• Online shopping spree
• Access existing financial accounts
• Divert victims mail to new address
• Apply for loans
• Rent apartments
• False tax returns for refund checks

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Identity Theft Protection

• Corporate vigilance
• Internal security
• Investigate potential cases
• Protect your own identity

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Mutual Fund Fraud Prevention
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