The Foreign Service Journal, April 2005

APRIL 2005 • AFSA NEWS 7 I nDecember, AFSA learned that at least five employees of Embassy Lusaka were victims of a check-fraud scheme that resulted in the looting of thousands of dollars fromtheir bank accounts. All of the employees affectedhad cashed checks over the summer at the embassy’s accommo- dation exchange, provided by Citibank. Criminal elements intercepted these checks, duplicated themandcashed them againat amounts ranging from $4,500 to$16,900 inOman, Lebanon, Taiwan, Uganda and the U.S. The embassy, local authorities inZambia, the StateDepartment andCitibankare investigat- ing todeterminewhere securitywas breached. Initially, the victims holding Citibank accounts were told that the bank was not going to reimburse the money stolen. AFSA intervened on behalf of these employees and raised the issue with Citigroup officials in the U.S. AFSA State VicePresident LouiseCrane sent a letter to theCEOof Citigroup, which included the following admonition: “The American Foreign Service Association represents all Foreign Service employees … I am writ- ing to you because I want Citigroup’s top management to focus on this issue. Our members are serving inhardshippostsover- seas where there are serious disease and security issues. If their checking accounts are nowsubject to looting, thenAFSAwill recommend the department take over this function from private banks such as Citigroup toprevent such fraud. This is an important quality-of-life issue for the ForeignService. … Citigroupshouldreim- burse them for the theft.” AFSA shared its concerns with State Department officials who, to their credit, promptly intervened with their contacts at Citibank. Following extensive discussions with AFSA,Citigroupagreed toreimburse all the funds that had been looted from the employee accounts. InJuly2004, thedepartment announced the “Paper Check Conversion Program,” tobeknownby the acronym“PCC,”which may help prevent the kind of check fraud that occurred in Lusaka. As described in 04 State 163694, “Over the next year the department will implement cashmanage- ment procedures that will transfer money collectedbycashiersmore safelyanddeposit it into the Federal Reserve Bank more quickly for credit toofficialU.S. government accounts.” Under thenewprogram, paper checkswill be immediately scanned intoan embassy computer and the actual check returned to the customer as a receipt, and no paper check will be sent out of the embassy. The newsystemwill be available at embassies atwhich the banking function is done by mission employees and is not contracted out to a private bank. AFSA supports—and is urging expe- dited implementation of — the new pro- gram. Under the PCC,moneywithdrawn on a cashed checkwill be almost immedi- atelydeducted fromtheaccount rather than taking days or weeks to reach the bank as ahardcopy, thus effectively eliminating the “float.” While someFSmembersmayhave come to rely on this float, AFSA believes the security gained with the new system is worth the trade-off. However, where the accommodation exchange at post is han- dledby private banks PCCcannot be used because of changes in overseas banking practices enacted after 9/11 (designed principally topreventmoney laundering). Connected to the new paperless direc- tion in banking, a new federal law “Check Clearing for the 21st Century Act,” or Check 21, was signedbyPresident Bush in October 2003 andwent into effect onOct. 28, 2004. This new program legalizes the use of digital images of checks as legal replacement documents for the paper checks. (More information is available at: www.federalreserve.gov/payment systems/truncation/default.htmand www. consumersunion.org/finance/ckclear1002. htm) Foreign Service personnel and fami- ly members are well advised to keep abreast of any changes made by their home banks. In looking to protect your account, consider all available banking options and take advantage of the online services available fromyour bank. Many banks offer free online bill payment ser- vices, and any bill paid online is one fewer check going though the mail. Many bills can also be paid through monthly auto- matic credit card charges, thus minimiz- ing the number of bills to pay. In addi- tion, Citibank has designed a program, Personal Banking forOverseas Employees, which offers many paperless banking services. ▫ WATCH THE BANK AFSA Gets Results: Money Returned to FS Victims of Check Fraud BY SHAWN DORMAN Consider all available banking options and take advantage of the online services available from your bank. JOSH