Pub. 1 2012 Issue 4

16 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s A customer claims something has disap- peared from his safe deposit box. How good are your bank’s controls? Many customers place valuables in safe deposit boxes and leave them for years. Most custom - ers do not keep regular inventories of their contents, relying instead on memory. Memories can be imperfect, regardless of a person’s age. When a customer comes to you “knowing” that something has been taken from her box, how will you be able to respond? If your control procedures are properly designed and followed, you will know whether or not someone could have improperly entered the customer’s box. First, the bank records should provide a signature, date and time that each box was entered. You can review these entry records to see if the customer’s signature was forged on the entry records. These records should also have been signed by anyone who accompanied the customer when the box was entered. This can serve as a reminder to the customer of who was with her when the box was accessed. This will often help when an honest customer has simply forgotten, for example, that she gave some of her jewelry to her niece. Second, the customer’s key should never be under the control of a bank employee. In some banks, it has been a practice to let a regular customer leave his key at the bank so he won’t need to remember to bring it with him. Such practice must be absolutely prohibited. In one case, the customer left his key in the safe deposit room when he was done. Bank employees found the key and stuck it with the card until the customer came in again six months later. The customer claimed that coins had disappeared from the box while the bank had possession of the key. Twelve different employees had access to the key during the six month period. If a customer does leave a key in the bank, procedures should require that the key be placed under immediate dual control and that the customer be contacted immediately, so that no employee is unjustly accused of accessing the customer’s box. In another case, the bank rented a safe deposit box to a man and his daughter. The daughter was not at the bank when the box was rented. The father said she would be in the next day to sign the box agreement. He left a customer key with the bank employee to give to the daughter. The daughter never came in, and the bank still held the key three months later when the father died. The daughter claimed that her father had told her what he had put in the box and that several of the items she believed were supposed to be in the box were missing. Several different employees had access to the key while it was at the bank. Third, the guard key should be kept in possession of bank personnel and never given to a customer. In one bank, to avoid making a customer wait for an employee to be free, the guard key was often given to the customer so he could enter his box. A husband and wife had a joint box. The husband then owned another box that the wife could not access. The husband claimed that his wife had taken some stock certificates out of his box. The bank’s procedure of allowing customers to have access to the guard key made it a possibility that the wife could have taken the husband’s key and opened his box after signing to enter the joint box. This resulted in the bank being in the middle of a nasty divorce. In another case, the bank allowed bank officers to take the guard key to enter their own boxes without signing in. A relative of a bank officer claimed that property was stolen from his box and claimed that the bank officer may have taken his key and then entered his box. The officer denied he had been in any box for months. Because the bank al - lowed officers to enter boxes without another employee controlling the guard key and without signing to enter, the relative made it appear that the officer was dishonest. No one should ever be allowed to enter any box without signing or without another employee controlling the guard key. Some banks have one-key boxes and entry to the vault is allowed by computer, which requires inputting the box number and a comparison of the size of the hand. Assuming a comparison of the hand size is adequate proof of identification (which is doubtful), this procedure does not prevent someone from getting into any box with a stolen customer key once he enters the vault to access his own box. Such safe deposit box systems that do not require two keys are not adequate and often cannot be insured. SECURITY OFFICER’S BY-WORD WHY DO YOU HAVE SAFE DEPOSIT BOX PROCEDURES? Charles M. Towle, Senior Vice President, Kansas Bankers Surety Company