Identify your Vulnerabilities to Counterfeit Fraud
No two organizations are alike. Even companies that are often compared to each other as “peers” will have unique requirements and varied exposure to different vulnerabilities. Similarly, no two points of transaction are the same. For this reason, it is not advisable to try to force an out-of-the-box solution to meet the needs of a company without first understanding what the problems and potential vulnerabilities are.
As an example, we could discuss the diverse operations of a large grocery store chain with whom Fraud Fighter has consulted. Our initial understanding of the transaction environment was that this type of operation performed a high-volume of relatively low-value transactions with a transient customer base. On average, the stores operated 11 cash-wrap locations. Accordingly, the initial discussions driven by the customer were focused on the need to validate payment forms and to verify ID’s for alcohol and tobacco product sales.
However, after learning in detail about the operations, we discovered that some of the greatest operational problems they had were associated with the “covered” financial transactions they conducted. Sales of money orders and electronic funds transfers to both domestic and international locations triggered a slew of regulatory compliance issues and reporting requirements. One Southern California region, alone, had seen greater than 25 separate IRS audits in one quarter in connection with the sale of money orders and wire transfer services.
In addition, the sale of PPA compounds (AKA, ephedrine, a pre-cursor chemical required for methamphetamine production) and the operation of a pharmacy also created the need to log and record identities of some customers.
In response, Fraud Fighter proposed a “multi layered” approach to address these vulnerabilities. At the cash-wrap locations, basic counterfeit detection devices (i.e. UV devices) were installed. At the customer service counter where money orders and wire transfers are processed, UV devices are installed alongside Image Capture devices to capture and securely store images of ID documents presented in order to comply with Red Flag, Customer Identification Program and Know Your Customer requirements. The same Image Capture device at the customer service counter is used to log ID’s for purchase of ephedrine products. The Customer service desk also uses an electronic currency verifier to quickly scan high-denomination banknotes presented at the time money orders and wire transfers are conducted. At the pharmacy, a separate Image Capture unit is installed to log medical cards and ID documents for all purchases of Class I narcotics. Finally, in the back-office, the FF-1000 is used to quickly perform a double-check on cash-drawer reconciliation counts.