SAN JOSE, Calif.-Credit unions can help limit employee fraud through a number of policies and procedures, but Michelle Greear said prevention needs to start even before someone is allowed to join the "family."

Greear, VP of learning and development for $1.5-million Technology Credit Union, said Tech CU takes the viewpoint that it "would like to head off fraud before it even begins."

"We spend a fair amount of time and resources during recruiting to ensure the prospects are vetted out during the application and interview process," she said. "This continues during their first 90 days of employment."

In one example, a Tech CU risk manager learned through a professional affinity group of a watch document that warned of certain people who were attempting to get hired at credit unions with the intention of infiltrating the organization and getting their hands on member information.

Greear said the risk manager sent the list of names of people who were flagged to the credit union's recruiter, "and sure enough, one person that applied for a job with us was on this list, so we were able to not hire that person."

After ensuring new hires are those, "we want in our family," Greear said the onboarding process begins. In addition to the usual precautions of bonding, she said Tech CU spends a "fair amount" of time in its new employee orientation, or NEO.

At NEO, Tech CU invites the risk management group to do not only a presentation on how to be watchful of members' assets and looking out for fraudsters trying to infiltrate the credit union from the outside, instructors stress what it means to work at a credit union.

"There are certain standards that apply to people who work at a financial institution," noted Greear. "We want to let them know we have expectations for exemplary behavior, which includes being on the lookout for fraudulent behavior that could lead to employee fraud."

Fraud Hotline
In the wake of the Sarbanes-Oxley Act of 2002, which required public companies over a certain size to have a dedicated "hotline" for employees to report fraud, Tech CU installed its own version. Greear said the credit union's hotline reports to its audit department, which is part of its Risk Management area.

"It is an anonymous line that allows an employee to report behavior they feel is risky or in violation of our standards of conduct or employee policies," she explained.

If a call is made to the hotline by a fraud tipster, Tech CU's Risk Management Department, in conjunction with human resources, then conducts an investigation. The next steps depend on the circumstances of the case.

"In my 10 years I have not been told of any cases where we needed to take any action," Greear said. "I think part of that comes from the third leg of the stool, which is ongoing, regular updates and reminders of the importance of our due-diligence with each other. We have regular conversations from the time folks are first brought on, and there is regular training in all branches by our fraud manager. We keep the issue top of mind with all managers by recertifying that they understand our fraud policies annually."

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