Pub. 10 2019 Issue 1

www.wvbankers.org 10 West Virginia Banker Is Your Bank Ready for a Visit from Jesse James and the Gang? By W. Scott Evans and James W. Lane Jr., Flaherty Sensabaugh Bonasso PLLC W est Virginia folklore has it that Jesse James and his band of outlaws robbed the Bank of Huntington on September 6, 1875. According to the Huntington Advertiser, the amount taken from the bank was between $19,000 and $20,000. While recent attention has focused on cyber-crimes that threaten banks and banking infrastructure, it is just as impor- tant to be prepared for old-fashioned crimes like those com- mitted by Jesse James and his gang of outlaws. Significantly, the last five years of the FBI’s bank crime statistics indicate that bank robberies have occurred on average 4,132 times per year nationally, which roughly translates into one bank rob- bery every two hours. From a local standpoint, it is important to note that bank robberies occur on average more often in the Southern United States. While businesses face an ever-in- creasing risk of cyber-crimes, bank robberies still pose a real threat that banks must be prepared to address. This article will examine some of the key legal and regulatory issues banks encounter due to the threat of crime and crime-related injuries to bank personnel and customers, as well as preventa- tive measures banks should consider to reduce exposure. Under West Virginia law, it is possible for an employer such as a bank or credit union, to be held liable to an employee who suf- fers damages because of the criminal conduct by a third-party. In addition to the risk of legal liability for injured employ- ees, an injured third-party, such as a bank customer, may bring civil action for injuries that result from a robbery. There are reported court decisions involving plaintiffs who have brought negligence claims based on the standards and requirements set by Congress in the Federal Bank Security Act of 1968 (“BSA”). This Act requires, in part, that banks adopt “appropriate security procedures to dis- courage robberies/burglaries” and holds a bank’s Board of Directors responsible to ensure the development and im- plementation of a “written security program for the bank’s main office and branches.” Litigants have used evidence of a bank’s failure to meet their minimum-security standards to establish liability for a bank customer’s injury. There- fore, considering this exposure, banks should update their security threat preparation and training, using the general security requirements of the BSA and its accompanying regulations as a minimum threshold. Furthermore, FDIC regulations direct that the bank’s Board of Directors must designate a security officer “who shall have the authority, subject to approval of the bank directors to develop and to administer a written security program for each banking office.” FDIC regulations outline the general contents of a security program which are to include: