Y2K-Related Fraud Prevention
July 12, 1999
Circular No. 11166

"Year 2000 Readiness Disclosure"

To the Chief Executive Officers of All State Member Banks, Bank Holding
Companies, Edge and Agreement Corporations, and Branches and
Agencies of Foreign Banks, in the Second Federal Reserve District:

The Federal Financial Institutions Examination Council (FFIEC) has issued guidance to encourage financial institutions to alert their customers about fraudulent schemes involving the century date change, as well as to mitigate their own risks by continuing to follow, and, where necessary, enhance their internal and external control procedures. Enclosed with the guidance is an FFIEC-prepared consumer advisory that the financial institutions may distribute to their customers. The advisory gives examples of Year 2000-related fraudulent schemes and outlines steps that customers can take to minimize their risk of becoming victims to fraud.

The following is from the FFIEC announcement of the guidance:

The FFIEC has issued guidance urging financial institutions to review their fraud prevention programs to ensure that they are protecting themselves and their customers from Year 2000-related fraud.

The FFIEC acted out of concern that criminal elements will try to defraud financial institutions and their customers using the Year 2000 as cover. The FFIEC guidance encourages institutions to enhance internal controls and security procedures and to communicate with customers about how to protect against Year 2000-related fraudulent schemes.

The FFIEC also issued a consumer advisory that financial institutions can provide to their customers. The "Year 2000-Related Fraud Advisory" alerts customers to several fraudulent schemes involving the Year 2000 and provides advice on how to avoid becoming a victim of these schemes. Specifically, customers are advised that they should:

  • Never give out account information, credit card or social security numbers, or other personal information to someone they don't know, unless they have initiated the contact;
  • Report any suspicious requests for confidential account information;
  • Receive and review account statements on a timely basis and contact their financial institution to report any suspicious request for confidential account information; and
  • Contact their financial institution with any questions about its Year 2000 readiness.

To protect themselves against Y2K-related fraud, the guidance urges financial institutions to take a number of steps to strengthen their internal controls. Financial institutions are urged to:

  • Train tellers and customer service representatives to recognize potential risks of Year 2000-related fraud to their financial institution and customers
  • Alert appropriate law-enforcement authorities of known or suspected criminal activities; and
  • Limit access to computer systems.

The FFIEC Year 2000-related fraud prevention guidance notes that federal regulators have been working closely with banks, thrifts and credit unions for several years to ensure that they take steps to prepare for Year 2000 and protect customers. The federal financial regulators believe financial institutions are making excellent progress and expect the industry will be prepared for the century date change.

The FFIEC's guidance and consumer advisory is available. Questions may be directed, at this Bank, to Sarah Dahlgren, Vice President, Bank Supervision Group, or to Ira Adler or Joseph Galati, Examining Officers, Advisory and Technical Services, Bank Supervision.