Customers at the Bank of Ireland branch in Bagenalstown will not lose out if a fraud is found to have been committed at the branch. A bank spokesman said yesterday customers will not lose any money lodged in the branch or any interest on that money. Generally, in any fraud against a bank where customer accounts are the conduit, the customer does not suffer, the spokesman said. Customer accounts are always fully reinstated after a checking process has been carried out. Another banking source commented that where a customer lodges money in good faith and the money is misappropriated within the bank, then the bank must make good the loss. "This is the way it has always been," the senior bank source said.
The terms "teaming and lading" are sometimes used to explain methods that can be used to commit a fraud within a bank. One method involves accepting deposits from customers and writing them up in the customers' deposit book but not entering the money involved, or all of it, into the bank's accounts.
Another method involves taking money out of customer deposit account without their permission, and either debiting the account in the bank's books or topping it up from another account or a new deposit.
When a fraud is discovered or suspected, a bank carries out a full review of all the accounts in the branch, particularly the accounts handled by the person suspected of carrying out the fraud.
"All the accounts are verified and any discrepancies are resolved," a bank source said. Customers are not asked to produce "receipts" for cash lodged but deposit books showing lodgements are checked. The verification process itself is open to abuse - such as false claims that lodgements were made. But one banker said that in a small branch the verification process is made easier because most customers are known to the staff.
Any fraud carried out over an extended period would pose questions about the bank's internal controls. According to banking sources, the only way such frauds could be carried on for extended periods would be where a branch official took total responsibility for particular customers, developing relationships with them and dealing with all their transactions.
But even in this situation, internal bank controls should prevent fraud by a branch official. One control - the rule that officials take two consecutive weeks' holiday every year - is aimed at ensuring that different officials deal with certain customers, so that anomalies in accounts can be spotted.
"Questions should be asked if any official was reluctant to take a few weeks annual holidays or took leave in individual days or two or three-day stretches," one senior banker commented yesterday.