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federal reserve ban k of DALLAS, TEXAS Dallas 75222 C i r c u l a r No. 78-42 A pril 13, 1978 EMPHASIS ON MEMBER BANK UTILIZATION OF VERIFICATION SERVICE FOR ANY TRANSFER OF FUNDS CREDIT NOTIFICATION RECEIVED FROM THIS BANK (Revision to Bulletin 6) TO THE CHIEF EXECUTIVE OFFICER OF THE MEMBER BANK ADDRESSED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: R e f eren c e is made to C i r c u l a r No. 78-34, d a te d March 24, 1978, in which th e latest atte m p ts to p e r p e t r a t e f r a u d u l e n t t r a n s f e r s of f u n d s w e r e r e p o r te d for in c i d e n ts w hic h o c c u r r e d o u ts id e the Eleventh D is tric t. S e v e ra l s u g g e s tio n s w e r e p r o v id e d in the c i r c u l a r for y o u r c o n s id e r a tio n . T h e following s u g g e s tio n h a s been noted p r e v i o u s l y a n d is s t r e s s e d a n d e la b o ra te d upon a t th is time for y o u r c o n s i d e r ation w hen r e v ie w in g y o u r o p e r a tio n s . Employees sho uld b e po sitiv e th a t it is the Federal R e s e rv e Bank calling w hen re c e iv i n g incoming t r a n s f e r s of f u n d s notification of c r e d i t . If t h e r e is a n y q u e s tio n th a t a te le p h o n e notification is u n usual o r pote ntia lly q u e s ti o n a b le in a n y m a n n e r , e . g . , an u n u s u a ll y l a r g e o r t h i r d - p a r t y t r a n s f e r , a r e t u r n c ollect te le p h o n e call to th e Federal R e s e r v e Bank sho uld b e made fo r v e rific a tio n . It is e m p h a siz e d v e r y s tr o n g l y th at we a r e p r e p a r e d to c o r r o b o r a t e , at a n y time d u r i n g norm al b u s i n e s s h o u r s , a ny t r a n s f e r of f u n d s c r e d i t for which te le p h o n e notification h a s be en g i v e n b y us a n d re c e iv e d by a m em ber b a n k . In fact, m em ber b a n k s a r e u r g e d to u tilize th is v e rifica tion s e r v i c e for a n y t r a n s f e r , b u t e s p e c ia lly for t h i r d - p a r t y c r e d i t a d v ic e s re c e iv e d by te le p h o n e . We e m ph a siz e the need for all m ember b a n k s to c o n tin u e to be a l e r t fo r p o s sib le a ttem pts to obtain fu n d s b y means of f r a u d u l e n t w ire t r a n s f e r s of f u n d s . T h e r e is en clo se d a r e v i s e d p a g e 5 of Bulletin 6 e ntitled " T r a n s f e r of F u n d s . " T h e p a g e h a s be en r e v i s e d in o r d e r to u p d a te Note 3 w hich c o n c e rn s Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank: 1-8 00 -492 -440 3 (intrastate) and 1 -8 00 -527 -497 0 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - te le p h o n e notification of t r a n s f e r s of f u n d s . T h i s r e v is io n e m p h a siz e s the verification s e r v i c e p r o v i d e d by this Bank for a n y t r a n s f e r of f u n d s c r e d i t te lep ho n e notification g i v e n b y u s . Additional c o pies of th e r e v i s e d p a g e to Bulletin 6 will be f u r n i s h e d upon r e q u e s t to th e S e c r e t a r y ' s Office of th is B a n k , Ext. 6267. S in c e re ly y o u r s , R o b ert H . Boykin F ir s t Vice P r e s i d e n t E n c lo s u re BULLETIN 6 FEDERAL RESERVE B A N K OF DALLAS NOTES: 1. (Refer to item 11) (a) We will accept telephone requests for transfers of funds in accordance w ith the Code W ord Authentication Procedure outlined in note 2. Telephone requests may be communicated by member banks as follows: Office A rea Code Dallas 800 800 El Paso Houston San Antonio 915 713 800 T elephone Number Extension Number 492-4403* (intrastate) 527-4970* (interstate) 544-4730** 659-4433** 292-5810* 6156,6157 6317,6321 6156,6157 6317,6321 72 31 or 54 23 or 24 ‘ Toll-free incoming WATS number. **Call collect. (b) A w ritten agreement authorizing specific oper ating officers of the member bank to issue tele phone transfer requests to us should be furn ished us by a member bank. The number of officers authorized should be limited to those few who perform this function on a routine basis. A member bank may designate individ uals other than officers to issue telephone transfer instructions, but designations must be evidenced by a resolution of the board of direc tors of the member bank authorizing the desig nated individuals to request transfers of funds and relieving us from any liability w hen acting upon such instructions. 2. (Refer to item 11) (a) A Code W ord A uthentication Procedure is util ized betw een member banks and our offices. It is designed to detect and prevent the processing of unauthorized telephone transfer of funds r e quests. (b) (1) We will furnish a listing containing an ap proximate three m onths’ supply of code w ords to each member bank which utilizes our transfer of funds facilities on a regular and continuing basis and which requests a listing. To the extent possible, the number of code w ords on a listing will approximate the number of transfers a member b ank is likely to make in a three-m onth period, based upon prior activity. To insure that code w ord listings do not become outdated through disuse or fluctuation in activity, all code w ord listings, if not earlier exhausted, will become null and void at the end of ex actly six calendar months from the issuance date shown on the code w ord listing. All code w ord listings are supplied only in re sponse to specific requests. (2) All requests for listings of code words should be in writing and signed by an offi cer of a member bank whose signature is on file w ith us. (3) Member banks should promptly acknowledge receipt of the code w ord listings. If a mem ber bank does not receive its code w ord authentication listings within a reasonable period of time after its request, it should immediately contact the manager or assis tant manager of our Accounting Department. (c) Each transfer of funds request will require a separate code w ord and it must be the next sequential, unused code w ord shown on the code w ord listing. Otherwise, it will not pass our code w ord authentication check and it will be necessary both to reconfirm the transfer request by telephone and to reconcile the dif ference in code words betw een the member bank and us. (d) At the bottom of each listing, it is noted that the list is for authorized use only. Since the the code w ord will be the principal method of verifying the authenticity of a transfer request, it is strongly suggested that only those indi viduals authorized to transfer funds at each m ember bank have access to the code words. This will help insure the confidentiality of the member b ank’s list and the integrity of the authentication procedure. (e) All telephone requests for transfers of funds will be automatically recorded on recording de vices and any bank utilizing this method to transfer funds hereby consents to the recording of such conversations. A w ritten letter confirm ing a transfer of funds will not be required unless specifically requested by this Bank. (f) Requests for transfers of funds utilizing the mails, W estern Union wires, TWX messages, and TELEX messages normally will not be hon ored. Requests utilizing these means of tran s mission should not be made and will be accept ed only w here prior arrangements have been made or in emergency situations. (g) Member banks not utilizing our transfer of funds facilities on a regular and continuing basis will not be supplied w ith code w ord list ings. To request a transfer, such banks should contact the Wire Transfer Division at the ap propriate Federal Reserve office. Such transfer requests will be authenticated on a call-back basis. 3. (Refer to item 19) A bank receiving and acting on any telephone noti fication runs the risk that it is invalid or unauthor ized. At any time during normal business hours we are prepared to corroborate any transfer of funds for which telephone notification has been given by us and received by a member bank; a telephone call from the receiving member bank to the m an ager or assistant manager of the Accounting De partm ent at the num bers shown in note 1. (a) will be promptly handled. Receiving member banks are encouraged to utilize this service, especially for third party advices received by telephone.
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