5 ITM Program Risks CIT Carriers Must Address

By Lowers & Associates,


Interactive Teller Machines (ITMs) represent a major shift in CIT carriers’ operations and that entails an added set of risks. In a global sense, ITMs offer an opportunity to expand a portfolio of cash management services that can make a CIT carrier even more important to a banking system. The rise of ITMs expose carriers to banks’ evolving policies on the use of ITMs within their own operations. This is a risk to which carriers can only adapt as banks’ operations become clear.

Beyond this, there is a set of specific risks that accompany ITMs. These risks are inherent in the flow of cash through the CIT system and changes in policies and procedures will be required to manage them so that the expanded cash management services are profitable. Here are 5 key ITM servicing risks that must be included in the CIT carrier’s risk management planning:

1. Loss of Life

By their actions, some people put a monetary value on life. This is incomprehensible to most of us, but it is a fact. The large amount of cash in a carriers’ truck or vault has always been a magnet to a few who will risk everything for a big payday. The advent of the ITM does not change this, though it may make the exposure even larger.

The reason we look at the extreme risk, loss of life, is because it focuses our attention on the fact that carrier’s risk evaluation and mitigation demand a comparably extreme approach given the potential catastrophic loss.

2. Increasing Violence

There is evidence that the extreme risks carriers face are increasing. Robberies are initiated with a drawn weapon more and more often. Robbers know that their “adversaries” are also armed, so the very fact that they persist in the attack indicates they are willing to use deadly force.

All carriers train extensively for these potentially violent encounters. The ITM poses challenges that make this even more important.

3. Servicing Complexity

ITMs offer customers greater flexibility in cash services and a wider range of transactions, up to and including opening new accounts of certain types. All of this makes the spot audits, transaction history, cash servicing, and record keeping more complicated. This all takes more time to service than the traditional ATM.

Greater time in service means the carrier crew is exposed to attack for a longer time. When more than one ITM is serviced in sequence at a single location, this effect is magnified. Carriers’ risk mitigation policies need equally robust improvements to accommodate the more vulnerable circumstances.

4. Organizational Fraud

The interactive feature of ITMs is one of its most attractive benefits. However, it sometimes means that a remote employee has to attend to a customer for a certain kind of transaction, such as identity verification or to explain and authorize a transaction. That means there’s a person on the “inside” who has access to some aspects of the cash management system, with a corresponding potential for fraud.

While this is in some sense the bank’s problem, carriers will often be held accountable for the failures that do occur. On the positive side, carriers can use this as an opportunity to deepen their cooperation with their banking partners.

Of course, another source of fraud is the CIT carriers’ own employees. ITMs require new internal controls and audits to address the new risks they pose.

5. Labor Shortages

Every CIT carrier already knows there are precious few employees and potential employees who can handle the high intensity risk of cash management with intelligence and calm. The currently tight labor market doesn’t help, and ITM complexity and service demand could make the situation even worse.

This risk has to do with the character and capability of employees and applicants. A very thorough background check can help, followed with intensive and on-going training. Given the high value of a tested and trusted employee, the premium on retention should be a special focus.

CIT carriers have always operated in a risky environment, so in one sense the addition of the ITM is business as usual. But the ITM is something new on the carriers’ routes, with a tighter integration to banks’ internal processes and a new class of risks built on the decentralized capabilities of the machines.

For a more thorough overview of how ITMs are changing CIT carriers’ operations, download A CIT Carrier’s Guide to Building Your ITM Program.


  Category: Cash In Transit
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The Case for a Risk-Based Approach to Compliance Auditing

By Lowers & Associates,

In general, compliance is conforming to particular expectations, standards, or behaviors, where risk is an exposure to potential loss or injury. When we think of compliance in the security arena, it often means that you are following prescribed standards, which could be regulatory, industry best practices, or standards that are otherwise customized or company specific.

While compliance and risk often follow the same path, a compliance audit or survey is often performed with a one-size-fits-all “compliance only” approach, as opposed to one that requires more complex reasoning.

Some may question the rationale of compliance if risk is not a constant consideration. Lack of experience, industry knowledge, or even simply lack of time can hinder the ability to take a more risk-based direction. After all, taking a compliance only approach simplifies the security audit process by allowing for uniform application, reduced subjectivity and error in assessment, and strong performance metrics capability.

Is the added complexity of a risk-based approach worth the effort? … Continue reading

ATM Fraud – An Internal Viewpoint

By Lowers & Associates,


Defined as the intentional act of trickery to unlawfully obtain funds from an ATM, most people associate ATM fraud with external crime, where the card or card number and associated PIN are illegally obtained by outside individuals, gangs, or even more sophisticated organized crime syndicates. Considered a form of identity theft by the Federal Trade Commission (FTC), while identity theft had been holding relatively steady for the last few years, the FTC cites a 20 percent increase in ATM fraud in 2011 alone.

From the onset of the proliferation in the use of ATMs, less sophisticated (but equally effective) methods of ATM fraud include such means as card trapping, skimming, and keypad overlays.  Trapping, as the name implies, is where the customer’s card is somehow trapped by the perpetrator only to be retrieved later. Skimming is where the perpetrator has put a device over the card slot of an ATM, which reads the magnetic strip as the user unknowingly passes his card through it.  These devices require the use of a miniature camera (inconspicuously attached to the ATM) to read the user’s PIN at the same time.

… Continue reading