These locations may be the financial institution’s branches, ATMs, domestic and foreign correspondents, or locations owned or controlled by commercial or retail customers of the financial institution. Management should establish appropriate risk-based guidelines to qualify customers for this service. Faulty equipment, inadequate procedures, or inadequate training of customers and their employees can lead to inappropriate document processing, poor image quality, and inaccurate electronic data. Counterfeit items may be similarly difficult to detect. For example, a customer or service provider may modify RDC-associated software or hardware or fail to update or patch an associated operating system in a timely manner. appropriate for all customers or for all financial institutions. Remote Deposit Capture (RDC), the digital processing of paper checks and monetary instruments at remote locations for deposit and clearing through the check (image) or ACH networks, has expanded rapidly in recent years and is being used at financial institutions and at customer locations. The Remote Deposit Capture Risk Assessment Workbook guides you in completing the step-by-step risk assessment. During the assessment, your ACH staff will receive custom education and solutions to ensure you have sufficient controls in place. This is a comprehensive risk assessment. Management should incorporate their assessments of RDC systems, including products and services, into existing risk assessment processes. Depending on the type of RDC system implemented, information security risks may extend to the financial institution’s own internal networks and networks of its service providers. Management should establish key operational performance metrics that support accurate and timely monitoring of risk within RDC processes. When the level of risk warrants, financial institution staff should include visits to the customer’s physical location as part of the suitability review. Remote Deposit Capture Risk Assessment Workbook (ELECTRONIC), Updated to include Mobile Remote Deposit risks, this comprehensive, easy-to-use Remote Deposit Capture Risk Assessment Workbook is designed to assist Financial Institutions in addressing remote deposit capture risk. The Management Booklet of the FFIEC IT Examination Handbook and the FFIEC Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual provide high-level descriptions of risk management processes that include planning, risk identification and assessment, controls, and measuring and monitoring. Once the assessment is complete, you will receive a detailed report of the assessed risks with recommendations for mitigating controls. Remote Deposit Capture Risk Assessment Template [RDC-RDCRA] - This template is provided as a guide in developing the institutions risk assessment of RDC operations. The institution should consider whether and to what extent it could be exposed to the risk of money laundering activities as well as its ability to comply with anti-money laundering laws and regulations and suspicious activity monitoring. The guidance calls for financial institutions to evaluate their risk to determine their own Remote Deposit Capture provisions, which can sometimes be even more challenging. The Remote Deposit Capture Risk Assessment Workbook guides you in completing the step-by-step risk assessment. 0 Management should assess carefully how RDC affects existing risks and mitigating controls. The institution should assess its agreements to verify that liability is allocated appropriately and that other matters, such as methods for resolving disputes and choice of legal jurisdiction, are addressed adequately. Management should implement as appropriate other controls that mitigate the operational risks of RDC, including those related to item processing as discussed in the Operations Booklet of the FFIEC IT Examination Handbook. PAR will perform a comprehensive ACH risk assessment that will help safeguard your financial institution from potential loss. Inadequate separation of duties at a customer location can afford an individual end-to-end access to the RDC process and the ability to alter logical and physical information without detection. 25% of consumers use a camera on their smartphone to deposit checks Source: 2018 Mercator Advisory Group report. (See further discussion under Contracts and Agreements.). This will also cover apps that allow customers to take an image of a check and deposit it into their accounts. Phone: (262) 345-1245Toll Free: (800) 453-1843Email: compliance@macha.org, Strategic Risk – Board and Management Oversight, Operational Risk – Training, ACH Receipt, Government Payments, ACH Origination, Other areas: ACH Audit, Third Party Senders, Direct Access, High-Risk Activities, Legal and Compliance Risk – Contracts, OFAC, BSA/AML, Operational Risk – Policies and Procedures, Data Security, Other Areas: Vender Due Diligence, High-Risk Activity, Cross Channel Payments Risk. RDC agreements should establish the control requirements identified during the risk assessment process and the consequences of noncompliance. Remote deposit capture (RDC) refers to the ability to deposit a check into a bank account from a remote location, such as an office or home, without having to physically deliver the check to the bank. The complexity of the risk identification and assessment process will vary depending on the scope of RDC implementation and exposures faced by the institution. Additional due diligence may be necessary where there is evidence that the RDC capture device is in a foreign location, or when a customer has been otherwise identified as being high risk. Accordingly, the board or management should approve plans, policies, and significant expenditures, and should review periodic performance and risk management reports on the implementation and ongoing operation of RDC systems and services. Without effective periodic training, RDC customers may have unrealistic expectations of the system or may not understand their roles in managing risks and monitoring for processing errors or unauthorized activity. Senior management should understand operational risks and ensure that appropriate policies, procedures, and other controls are in place to mitigate them, including physical and logical access controls over RDC systems, original deposit items at customer locations, electronic files, and retained nonpublic personal information. These controls should be designed and implemented to ensure the security and integrity of nonpublic personal information throughout the transmission flow and while in storage. The financial institution’s business continuity plan should address RDC systems and business processes, and the testing activities should assess whether restoration of systems and processes meets recovery objectives and time frames. endstream endobj 80 0 obj <> endobj 81 0 obj <> endobj 82 0 obj <>stream The Workbook content mirrors the FFIEC Remote Deposit Capture Risk Management Guidance. Remote Deposit Capture (RDC), a deposit transaction delivery system, allows a financial institution to receive digital information from deposit documents captured at remote locations. There are; however, Remote Deposit Capture risk management standards provided by the FFIEC Guidance. In substance, RDC is similar to traditional deposit delivery systems at financial institutions; however, it enables customers of financial institutions to deposit items electronically from remote locations. When appropriate and available, insurance coverage should be considered as a risk transfer mechanism. The general principles of RDC risk management discussed here are also applicable to financial institutions’ internal deployment and other forms of electronic deposit delivery systems (e.g., mobile banking and automated clearing house [ACH] check conversions). Specific contract provisions for consideration include: Senior management should ensure the financial institution’s ability to recover and resume RDC operations to meet customer service requirements when an unexpected disruption occurs. After the assessment, you will receive a detailed easy-to-read electronic report showing the assessed risks, recommendations for mitigating controls, and a section for your execution strategy. A financial institution’s RDC risk assessment should include a determination of the risks to the security and confidentiality of nonpublic personal information consistent with the Interagency Guidelines Establishing Information Security Standards (Guidelines). Similarly, forged or missing endorsements, which may be detected in person, may be less easily detected in an RDC environment. PAR is here to help your financial institution comply with the FFIEC Guidance by conducting and maintaining your payments risk assessments. Unlike ACH with the NACHA Operating Rules, there are not any set rules for Remote Deposit Capture. Roles and responsibilities of the parties, including those related to the sale or lease of equipment and software needed for RDC at the customer location; Handling and record retention procedures for the information in RDC, including physical and logical security expectations for access, transmission, storage, and disposal of deposit items containing nonpublic personal information; Processes and procedures that the customer must follow, including those related to image quality; Imaged documents (or original documents, if available) RDC customers must provide to facilitate investigations related to unusual transactions or poor quality transmissions, or to resolve disputes; Periodic audits of the RDC process, including the IT infrastructure; Performance standards for the financial institution and the customer; Allocation of liability, warranties, indemnification, and dispute resolution; Funds availability, collateral, and collected funds requirements; Authority of the financial institution to mandate specific internal controls at the customer’s locations, audit customer operations, or request additional customer information; and. To the extent possible, contingency plan development and testing should be coordinated with customers using RDC. There are many elements that management should consider when developing customer contracts. The size and complexity of the financial institution, as well as the relative scale and impact of RDC to overall activities, should determine the appropriate level at which governance, oversight, and risk management of RDC should occur. 58% of financial institutions offering mobile banking services to businesses have active usage rates of less than 5% This guidance addresses the necessary elements of an RDC risk management process in an electronic environment, focusing on RDC deployed at a customer location. Operations staff, risk managers, compliance officers as well as audit personnel will find this workbook a useful tool. Financial institution management and the customer should implement effective risk measurement and monitoring systems. Financial institutions should approach their risk management responsibilities by involving all potential stakeholders in RDC. %PDF-1.5 %���� Strong change control processes coordinated between the institution and customer can help to ensure synchronized RDC platforms, operating systems and applications, and business processes. Remote deposit capture (RDC) refers to the ability to deposit a check into a bank account from a remote location, such as an office or home, without having to physically deliver the check to the bank. This template was helpful and does a good job of outlining the risks of RDC and the mitigating controls. It can be hard for financial institutions to stay up-to-date with RDC guidelines and impending risks. For example, if a financial institution accepts a deposit of check images from a customer through the RDC system, legal risk exposures may be related to the controls over the process used for image capture or image exchange and the institution’s arrangements and contracts for clearing and settling checks. The financial institution, in its In addition, the financial institution should review available reports of independent audits performed at the customer location related to IT, RDC, and associated operational processes.

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