Citi Case Exposes Insider Risks
Internal Controls Could Have Detected Fraud Much Sooner
by Tracy Kitten, Managing Editor

Source: Bank Info Security

On June 26, federal authorities arrested a former Citigroup executive for allegedly embezzling more than $19 million from Citi and its customers.

Gary Foster, who worked in Citi's treasury finance department, was arrested by the Federal Bureau of Investigation at John F. Kennedy International Airport, just as he returned from a trip to Bangkok.

The United States Attorney for the Eastern District of New York has charged Foster with bank fraud. If convicted, he could be sentenced to 30 years in prison. ...

Lack of Internal Controls
Shirley Inscoe, director of financial services solutions at Memento and a former risk management executive at Wachovia who authored "Insidious: How Trusted Employees Steal Millions and Why It's So hard for Banks to Stop Them," says Citi is not alone. Most banks have done a poor job of keeping up with internal threats. [See Database Security Policies Needed.]

"With the economic downturn, I think many banks have cut back on their internal controls and fraud detection because of very tight budgets," Inscoe says. "Any other bank could have just as easily been victimized." ...

Read full article at Bank Info Security

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