Bank Security: Own the Night
How financial institutions can apply the Broken Windows Theory of Policing to prevent criminal activity and stop losses due to fraud
Tom Leuchtner, Director Financial Crime Control Solutions, Wolters Kluwer Financial Services
Tony Kaus, Senior Consultant Financial Crime Control Solutions, Wolters Kluwer Financial Services
Chief Security/Risk Officers (CSO/CRO) and those working in Fraud Mitigation, Loss Prevention and Operational Risk Management for financial institutions are dealing with a new era of cybercrime ushered in by the e-banking revolution. Often facilitated by insiders, cyber attacks use computer viruses and malicious code (malware) to siphon off millions of dollars every year in fraudulent wire transfers, Automated Clearinghouse (ACH) transactions and other unauthorized account activity
An effective financial crime control program prevents such fraudulent activity by detecting behaviors that typically precede an attack and, at the earliest stage, disrupting the cycle of crime that results from potentially dangerous relationships between employees, customers and outside criminals. The constant presence of an automated sentry disrupts criminal activity, dissipates threats and, most importantly, enables the deterrence of future criminal attacks. This strategic approach to fraud prevention focuses on precursor behavior patterns and transactions, much like the “Broken Windows” approach to policing pioneered by the New York City Police Department in the 1970s. It is a strategy that breaks the cycle of crime and effectively mitigates risk.
This paper explores aspects of the “Broken Windows Theory of Policing” that have been successfully implemented nationwide. The paper points to effective lessons learned from the Broken Windows approach that are applicable to today’s world of cybercrime. By applying the Broken Windows theory to anti-fraud and loss prevention strategies, financial institutions can signal a “police presence” that maintains order and promotes integrity in the workplace. The paper outlines clear strategies and actions that can help in fraud mitigation, loss prevention and operational risk management. Further, this paper investigates how realtime monitoring and reporting can provide actionable intelligence for the interruption of activities and behaviors that are the pre-cursors to financial crime, effectively disrupting fraudulent schemes before they come to fruition.
Origins of Broken Windows Theory
Police foot patrols dispatched to crime-ridden neighborhoods in the mid 1970s adopted the motto, “We own the night,”1 when their crackdown on petty crime made city streets safer. Operating on the theory that just one broken window can send the signal that no one is watching, police maintained order by enforcing laws against vandalism, littering, trespassing, disorderly conduct and other quality-of-life crimes. The so-called “Broken Windows” theory of policing, popularized by a 1982 article in The Atlantic,2 has since been tested and proven effective in cities throughout the United States.3
Excerpt from "Bank Security: Own the Night," Wolters Kluwer Financial Services Copyright 2010 Wolters Kluwer, Waltham, MA