1. Federal Reserve Retail Payments Risk Forum
Dan Miner, CTP
Principal
Atlanta, Georgia
November 5, 2009

2. Agenda About TSI Industry Observations Trends in Payments Fraud
Tools to Protect your Cash
Best Practices in Fraud Protection
Conclusion

3. About Treasury Strategies
Who We Are
Treasury Strategies, Inc. is the leading treasury consulting firm working with corporations and financial services providers. Our experience and thought leadership in treasury management, working capital management, liquidity and payments, combined with our comprehensive view of the market, rewards you with a unique perspective, unparalleled insights and actionable solutions.
What We Do
Corporations
We help you maximize worldwide treasury performance and navigate regulatory and payment system changes through a focus on best practices, technology, liquidity and controls.
Financial Services
Our experience, analytic approach and benchmarks provide unique consulting solutions to help you strengthen and grow your business.
Treasury Technology
We provide guidance through every step of the technology process. Our expert approach will uncover opportunities to optimize the value of your treasury through fully integrated technology solutions.

4. FI Risk and Regulatory Compliance Reviews
1,006 Individual Standards / Mitigants
Regulation CC, Regulation E, FFIEC Guidance / Standards, NACHA Rules, BSA/AML, UCC 4, UCC 4A, Regulation O, GLBA, and best practices
Met, partially met, gap
Prioritization and plan to address
Policy documentation
Observations
Risk and compliance fragmented by product
Lack of consistency
Poor governance
Incomplete documentation
Inadequate client risk training / education

5. Business Fraud Risk Mitigation
Businesses must use
the tools available to them
Internal Controls
Bank tools
Third party tools

6. Trends In Payment Fraud
The 2009 AFP Payments Fraud Survey found that 71% of all firms experienced at least an attempted fraud in 2008.
38% of those firms observed a specific increase in fraud levels in the second half of when the economy was in the middle of the economic crisis.
Estimates have put the total cost of payment fraud to businesses at $50B a year.
Sources: 2009 AFP Payments Fraud Survey, Union Bank

7. Trends in Payment Fraud
The AFP Survey also found that firms were most likely to experience attempted check fraud. Of the firms that have experienced attempted payment fraud:
91% through Check
28% through ACH Debit
18% through C2B Card
14% through B2B Card
7% through ACH Credit
6% through Wire
Recent Treasury Strategies market research found that checks are the primary source of fraud at a majority of firms.
Sources: 2009 AFP Payments Fraud Survey, 2009 Treasury Strategies & Financial Insights Key Trends in North American Treasury Report

8. Most Effective Tools in Fraud Protection
92% of firms reported in recent Treasury Strategies market research that anti-fraud products are the most effective means to prevent fraud.
Source: Treasury Strategies & Financial Insights Key Trends in North American Treasury Report

9. Best Practices in Fraud Protection
A company can implement the following practices to help protect itself from fraud across all payment types:
Ensure that any payment-related communications are executed using a secured channel such as encrypted
Secure access to critical financial information, systems, and supplies, passwords, tokens
Segregate payment-related accounts and duties
Dual approvals
Restrict use of online data communication - websites,
Segregate systems for financial data
Increase relative mix of electronic payments relative to paper-based payments
Use up-to-date, tamper-proof check stock
Reduce the number of bank accounts
Monitor all accounts daily
Using Positive Pay for Checks and ACH
Stop using checks

10. Conclusion
Checks are the primary channel for payment fraud today, despite rapidly declining volumes of check payments over the past few years.
However, as online fraudsters become more sophisticated and the popularity of electronic payments rise, the risk of web-related payment fraud also rises.
Companies and FIs can protect their cash with the combination of internal process improvement and adoption of any of the fraud prevention products on the market.