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F E D E R A L R E S E R V E BAN K O F NEW Y O R K [ C ircular No. 6624 1 October 23. 1970 J Federal Reserve Bank Checklist Procedures for Government Securities Reported as Missing or Stolen T o A ll B a n k s , a n d O th ers C on cern ed, in th e S eco n d F e d e ra l R e se rv e D is tr ic t : D uring the past year there has been a m arked increase in the incidence and m agnitude of th efts of U nited States Government and agency securities from banks and other financial institutions. W hen it became apparent th a t the problem was becoming acute, the T reasury and the Federal Reserve System undertook a comprehensive review of the problem and of m easures to cope with it. The Treasury, of course, has a direct in terest in any developments relating to Government securities, and the Reserve Banks, as fiscal agents of the U nited States, share th a t interest. In addition, the F ederal Reserve System has a direct interest in the prob lem of thefts of Government securities as th a t problem affects member banks and the banking system, and as it affects the perform ance of the Government securities m arket, through which the S ystem ’s open m arket operations are conducted. As the result of such a review, in June of this year the T reasury adopted certain changes in its regulations and procedures designed to accelerate the time w ithin which the T reasury can process and g ran t relief on stolen or m issing securities. O ther changes in T reasury policies and procedures are also under active consideration. A p a rt from their responsibilities as fiscal agents of the T reasury, the Federal Reserve Banks have undertaken fu rth e r measures, in their capacities as the central bank, to assist in m eeting the problem of stolen Government securities. Over the past year, the Reserve Banks have been developing a “ checklist’’ procedure for the purpose of m aintaining a surveillance fo r transferable United States Government and agency securities reported as stolen or missing by the financial community. U nder th a t procedure, each Reserve Bank obtains current infor m ation on such securities from banks and other financial institutions and investment and brokerage firms within its D istrict, and forw ards such inform ation to a coordinating Reserve Bank. The coordinating Bank compiles and distributes a m aster checklist containing such inform ation to all 36 F ederal Reserve Bank or B ranch offices throughout the country, and it keeps the list current by inform ing all such offices prom ptly, by wire, of any changes in the list. U sing the list, each F ederal Reserve office has established procedures to check Government securities received a t th a t office. The checklist procedures v ary from office to office, depending on local conditions and circumstances, but in general are designed to check prom ptly all G overnment and agency securities received a t the office. Each Federal Reserve office is also p repared to serve as a clearing house for inform ation regarding stolen Government securities. I t will be p repared to answer inquiries regarding such securities from parties—such as banks and other financial institutions—having legitim ate interests in such inform ation. I t will also be p repared to facilitate prom pt contact w ith the local offices of appropriate law-enforcement agencies—including, where appropriate, police authorities or the Federal B ureau of Investigation, or both—regarding such m atters. U nder the procedure, whenever a listed security is discovered, the Federal Reserve office will inform the appropriate law-enforcement agency, as well as the T reasu ry and other in ter ested parties, of the discovery so th a t they may act prom ptly in taking w hatever steps they m ay deem necessary. The F ederal R eserve’s p rim ary function is to inform the appropriate parties of the discovery of a listed security as prom ptly as possible. No fu rth er action is contem plated by the F ederal Reserve Bank, and the law-enforcement agencies will take w hatever steps they consider appropriate in the circumstances. I t is understood th at the Reserve Bank checklist is not a “ cav eat” list or a “ stop pay m en t” list, th at the Reserve Banks undertake no responsibility with regard to any p a rty in m aintaining the list, and th a t the Banks will not be liable for any act, or any failure to act, w ith respect to searching for, or identifying, any security reported to a Reserve Bank or described on the list. While the checklist procedure is undertaken by the Reserve Banks in their individual capacities, based on th eir role and responsibilities as the central bank and not as fiscal agents of the U nited States, it is also understood th a t each Reserve B an k ’s pro cedures are consistent with T reasury regulations and instructions governing lost or stolen securities—as reflected in T reasury D epartm ent C ircular No. 300 and related documents— and with the B an k ’s responsibilities as fiscal agent of the U nited States. In general, the Reserve Bank checklist procedure was designed to supplem ent existing procedures; it has been established within the fram ew ork of existing T reasu ry regulations and is based on full cooperation with the F.B .I. and local police authorities. The checklist procedure has been in effect at many F ederal Reserve offices for several months. A uniform, coordinated system has recently been adopted by all Federal Reserve offices and is now in operation throughout the country. Banks and other financial institutions, as well as investm ent and brokerage firms, may utilize the system by subm itting inform ation on m issing transferable U nited States Government and agency securities to th eir local Federal Reserve office. Such inform ation should include the full name and type of the security, the due date, the serial number, and the denomination. F o r the procedure to be most effective, it is urged th a t such reports be submitted as prom ptly as possible. Institutions reporting m issing securities are also urged to inform their F ederal Reserve office if such securities are subsequently located. In all cases it is essential th at the inform ation on the checklist be kept current. As a general rule, securities will be autom atically deleted from the checklist w ithin specified periods a fte r m a tu rity ; for example, T reasury bills will be deleted 10 weeks a fte r m aturity, notes will be deleted 18 weeks a fte r m aturity, and bonds will be deleted 31 weeks a fte r m aturity. In this connection, it should be noted th a t the N ational Crime Inform ation Center (NCIC) —a computerized system operated by the F.B .I. for compiling d ata on stolen property, includ ing securities—is available to banks and financial institutions through local law-enforcement authorities and field offices of the F. B. I. and the Secret Service. U nder this system, a p arty suspecting th a t a particular security m ay be a stolen security m ay contact a local law-enforce ment office and request th a t an inquiry be made to the NCIC from local term inals m aintained throughout the country. The NCIC includes inform ation on U. S. Savings Bonds—as well as other securities, including corporate stocks and bonds—reported to law-enforcement agen cies ; the Reserve Bank checklist procedure is limited to transferable U nited States Government and agency securities reported to F ederal Reserve offices by banks and other financial in stitu tions and investm ent and brokerage firms. F u rth e r inform ation on the use of the NCIC may be obtained from local law-enforcement offices or any F ed eral Reserve office. I t should be stressed th a t any institution subm itting inform ation on m issing securities to a Federal Reserve office should also submit reports on the securities to the app ro p riate lawenforcement agencies. The Reserve Bank checklist procedure is not intended to substitute in any way for the usual procedures fo r reporting m issing or stolen securities to law-enforce ment agencies. All such institutions are also urged to act prom ptly in filing such reports or in taking any other action with respect to m issing securities; experience has dem onstrated that prom pt action is most effective in leading to the apprehension of the crim inals involved in securities thefts. A ny institution having a legitim ate interest in obtaining inform ation on specific securities on the F ederal Reserve checklist may do so by contacting its local F ed eral Reserve office. In all cases, the F ederal Reserve office will satisfy itself as to the appropriateness of any requests fo r such inform ation. In this D istrict, such requests for inform ation, as well as any general inquiries regarding the use of the Reserve Bank checklist procedure, m ay be made by telephone to our Government Bond Division (Telephone Number 212-732-5700, Extension 323, 381, or 666); or, in the area served by the Buffalo Branch, to the Collection, Loans and Fiscal Agency Division of the Buffalo Branch (Telephone Number 716-853-1700, Extension 229 or 227). * The checklist procedure was designed prim arily to help recover lost securities. J u s t as im portant are m easures designed to minimize the risk of loss or th eft of securities. In this respect, the book-entry procedure for Government securities will ultim ately afford the optimal solution to the problem of thefts of Government securities, fo r it almost eliminates the pos sibility of such thefts. Both the F ederal Reserve System and the T reasu ry are proceeding with the fu rth er expansion of the book-entry procedure. Banks are urged to utilize the p ro cedure to the maximum extent possible during each stage in its continuing development. A lfred H a y es, President.
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