Bank Directors Seminar, Coeur d'Alene, ID

11/09/2018

Effective Fraud Hotline Implementation • Awareness • Available to Employees, Suppliers & Customers • Define Reportable Events • Purpose of Hotline • Privacy • Whistleblower protections • Tracking

• Monitory complaints and follow-up action • Reviewwith appropriate parties

• Risk-AwarenessTraining • Reportable Improprieties

• Investigations

• Operations

• Made on case-by-case basis • Report to audit committee

• Cost BenefitAnalysis • Appropriate Staffing

• Independence

• Keep Separate from Bank Management

Additional Best Practices

• Pay attention to lifestyle and behavior changes • Mandatory one-week vacations • Employee dishonesty insurance in excess of $100,000 • Fraud risk assessments

“

“Remember: trust is NOT an internal control.”

13