Bankers blanket bond
A policy for banks and financial institutions covering their direct losses from employee dishonesty, theft, forgery, counterfeiting and computer fraud, the historical form of crime insurance applied to finance.
The bankers blanket bond is the policy that protects a bank, a securities broker or an asset manager against direct losses of money and securities caused by fraudulent acts. It traditionally covers employee dishonesty, when staff misappropriate funds with intent to gain or to cause the institution a loss; theft and destruction of valuables on premises and in transit; forgery of checks, bills and securities; counterfeit currency; and, in modern forms, computer fraud and electronic funds transfer fraud. It is often sold with professional liability and directors' liability covers, together forming the financial institutions lines. Underwriting focuses on internal controls: segregation of duties, dual authorization, job rotation, audit, and, for computer fraud, the security of payment systems. The cover applies only to the insured's direct losses, not its liability to customers, and it is generally triggered on discovery of the loss rather than on its occurrence, which matters for internal frauds concealed for years.
In February 2016, hackers used Bangladesh Bank's credentials on the interbank messaging network to order 35 transfers from its account at the Federal Reserve Bank of New York; 81 million dollars were diverted to Philippine casinos. Investigations attributed the operation to a group linked to North Korea, a borderline case of computer fraud where a financial institution's direct loss meets state risk.
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