Banking and Financial Services

Cash Management & Security

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• Most readily available payment alternative

• Most used for smaller-value purchases

• Used most often in emergencies

• Increased use of cash due to ATM convenience

• Increased demand for cash in foreign countries

Purposes for Cash Copyright © Texas Education Agency, 2014. All rights reserved. 3

• Cash dispensers

• Recyclers

• Smart-safes

Cash-Handling Devices Copyright © Texas Education Agency, 2014. All rights reserved. 4

• Drawer that contains various denominations of cash

• Stored in the vault during non-banking hours

• Form, paper or electronic, shows beginning and ending balance for the day

• Form also shows dollar amount of each denomination in cash drawer at beginning and end of day

• For unbalanced cash drawer, verify if a counting error or if it is actually short or over, then follow bank procedures

Cash Drawers Copyright © Texas Education Agency, 2014. All rights reserved. 5

• 12th District Cash Operations responsible for procedures to process currency and coins to the banks and financial institutions in the largest of the 12 districts that make up the Federal Reserve

• 12th District covers 35% of the country

• High-speed sorting and processing of the currency

Federal Reserve’s Role in Cash Management

Copyright © Texas Education Agency, 2014. All rights reserved. 6

Public withdraws cash

from a bank.

Excess cash is deposited at the Federal Reserve

Federal Reserve checks currency for “fitness” and removes “unfit”

currency.

Banks receive deposits from

customers

If needed, banks make loans for cash from the

Federal Reserve

Flowchart of Cash Circulation Copyright © Texas Education Agency, 2014. All rights reserved. 7

• Cash that has outlived its useful life, for example-

• Damaged currency

• Worn currency

• Possible counterfeit cash

• Partially destroyed notes can be exchanged by the Treasury

Types of “Unfit” Cash

Denomination Useful Life (in Years)

$1 5.9

$100 15

Destroyed by the Federal Reserve

Turned over to the Secret Service for investigating

Copyright © Texas Education Agency, 2014. All rights reserved. 8

Two divisions of the Treasury– The U. S. Bureau of Printing and Engraving• Prints currency

– The United States Mint• Prints coins

Who Creates the Cash? Copyright © Texas Education Agency, 2014. All rights reserved. 9

Security Features of Cash

• Watermark – appears when held up to the light

• Color-shifting ink – changes at different angles

• Low-vision features – larger numbers

• Fine-line printing patterns – difficult to copy or scan

• Enlarged off-center portrait – more room for security threads

Copyright © Texas Education Agency, 2014. All rights reserved. 10

• U. S. Treasury ships currency notes to the Federal Reserve banks, which pay the Fed the cost of shipping

• The Treasury delivers coins from the mint to Federal Reserve banks in armored cars

• The banks pay the Fed for the face value of the coins

• The Fed can make arrangements for banks to buy coins from banks that have excess

Transport of Cash Copyright © Texas Education Agency, 2014. All rights reserved. 11

• Bank teller – a bank employee with the most customer interaction of any bank employee, whose main responsibilities involve processing deposits and withdrawals

• Organizing and balancing a cash drawer

• Counting cash

• Process deposits

• Process cash for transport

Roles of a Bank Teller Regarding Cash Handling Copyright © Texas Education Agency, 2014. All rights reserved. 12

• Process initial deposit for new accounts

• Assists in marketing by offering specials to customers

• Reports need for additional cash to head teller or branch manager, so it can be ordered from the Federal Reserve

• Processes end-of-day cash to be sent to Federal Reserve by way of armored vehicle according to procedures found at the following web site: http://www.frbservices.org/files/regulations/pdf/operating_circular_2_cmop.pdf

Copyright © Texas Education Agency, 2014. All rights reserved. 13

Online Security Measures

• Banks need protection from– Hackers- experts in obtaining or manipulating

computer data– Viruses- computer infections that can spread through e-

mail and other files that are shared

• Banks can get protection from– Firewalls- a way that a business can block unauthorized

access to its network

Copyright © Texas Education Agency, 2014. All rights reserved. 14

• Required for FDIC-insured state banks that are not members of the Federal Reserve System

• Divided into three sections– Security officer– Security program– Reports

Minimum Security Procedures Copyright © Texas Education Agency, 2014. All rights reserved. 15

• Designated by the board of directors

• Develops a written security program

• Program developed within 180 days

Designation of a Security Officer Copyright © Texas Education Agency, 2014. All rights reserved. 16

• Procedures for safekeeping of currency

• Maintaining cameras

• Identification devices– Serial-number bills– Chemical or electronic devices

• Training of employees and officers

Security Program Copyright © Texas Education Agency, 2014. All rights reserved. 17

• Testing and maintaining security devices– Vault or safe– Lighting system– Alarm systems– Tamper-resistant locks

• Factors to consider– Costs– Distance location is to law enforcement– Incidence of previous crimes

Security Program (continued) Copyright © Texas Education Agency, 2014. All rights reserved. 18

• Report annually on– Program administration– Program effectiveness– Program implementation

• Report to board of directors

Security Reports Copyright © Texas Education Agency, 2014. All rights reserved. 19

• Bank Teller Performance Evaluation Assignment #1 – Students will research performance evaluations for bank tellers. They will create a word processing document that contains what they think an evaluation should look like. At the very minimum, it should include sections for customer service skills, cash handling procedures, professionalism, and marketing efforts (such as upselling or selling additional services). Include appropriate graphics.

• Counterfeit Money Assignment #2 – Students will go to the Secret Service website listed in the references above and develop a step-by-step guideline regarding counterfeit currency detection. This can be done in report form, brochure, flowchart, or any medium as long as the procedures are thorough and complete. Include appropriate graphics.

• Security Issues Report Assignment #3 – Students will research the amount of money that banks lose each year due to identity theft, hacking, counterfeit money, and other security issues. They will prepare a one-page report detailing the losses and what has been done to alleviate these problems with security. Proper writing conventions should be followed.

Independent Practice Assignments Copyright © Texas Education Agency, 2014. All rights reserved. 20