KINGSTON, Jamaica — An Opposition lawmaker is proposing that legislation be introduced that would allow persons whose accounts have been fraudulently accessed by employees of financial institutions to be able to bring a civil suit against the worker and or the institution, where they can prove they have suffered damages.

The Member of Parliament for St Andrew Western, Anthony Hylton, made the suggestion on Thursday during a meeting of the Parliament’s Economy and Production Committee, before which a team from the Bank of Jamaica (BOJ) appeared.

Hylton made the proposal after Deputy Governor of the BOJ, Dr Jide Lewis, reminded that deposit-taking institutions (DTIs), no longer levy a fee against so-called dormant accounts. He said this has been the case for nearly three years as banks have embraced technology to manage these accounts.

Lewis said DTIs had indicated that previously, when they relied on manual processes, they had to employ labour to administer these accounts to, among other things, make sure staff did not have access to the accounts and to ensure that all the KYC (Know Your Customer) documentation was up-to-date etc.

Additionally, Lewis said banks have put in place electronic systems to alert them whenever dormant accounts were being accessed by their staff, in a bid to combat internal fraud.

Hylton embraced the developments but said that “In order to safeguard these accounts, the Government and the Parliament ought properly then to put in place a policy or directive, a clear legislative or regulatory [framework], some kind of resolution, to ensure that this is now outlawed.

“Not just that the banks no longer need to do that because things can change.” Hylton pointed out that banks could legally revert to charging a fee to maintain dormant and inactive accounts.

Lewis sought to explain that there are legal obligations for banks to ensure that they put in place mechanisms that allow them to manage fraud risk, including internal fraud.

“There are legal obligations for banks to notify immediately the supervisor if there is an event at the bank that causes it to lose funds in a manner that’s not consistent with its normal operating business, including fraud,” Lewis explained.

The deputy governor reiterated that the BOJ is satisfied that each bank has systems in place to notify immediately by electronic means, if an account is accessed by its staff in real time.

Hylton enquired whether the remedy for a breach is only regulatory. Lewis said a breach of the Banking Services Act would result in sanctions.

“When a staff member is involved in internal fraud, there are actions that the bank itself will take and there are also actions that the police will have to be brought into take because it is also a criminal activity,” said Lewis. He also pointed out that the customer’s account is usually restored fully, including interest foregone, and the liability borne by the financial institution.

But Hylton insisted that civil remedies should be considered to go alongside regulatory and criminal actions. He argued that where depositors’ money is at risk, or they may have suffered loss that can be proven, for example losing out on an investment while they did not have access to their money while an investigation and court proceedings take place, civil remedies should be pursued.

He questioned whether being made whole includes damages being awarded to the customer arising from the criminal or other action from the bank staff.

“The lost opportunity is not simply restricted to interest foregone, but he (depositor) could have suffered significant damages for which he can prove that, but for that mischief (fraud) in the bank, he would have secured an opportunity for which he has lost and has been injured,” said Hylton.

“I’m suggesting that in those circumstances, the customer should be entitled to pursue a claim against the bank and against its employees for these damages,” he added.