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October 4, 2007

DiNapoli Calls for Better Oversight of Bank ATMs

Audit Identifies Inadequate Banking Department Enforcement of Bank Safety Act

New York State Comptroller Thomas P. DiNapoli today called on the New York State Banking Department to prioritize ATM inspections in high crime areas. According to a DiNapoli audit released today, the Banking Department fell far short of its current annual ATM inspection goal. The Department is required to conduct inspections under the 1996 ATM Safety Act.

“New Yorkers should be safe when they’re using an ATM,” DiNapoli said. “Unfortunately, the current inspection process fails to ensure that all machines, particularly those in high crime areas, meet safety standards. Ensuring compliance with the ATM Safety Act is not a matter of working harder; it’s a matter of working smarter. The Department needs to prioritize inspections based on risk, using crime statistics and other law enforcement data.”

Under the 1996 ATM Safety Act, all federal and state-chartered banking institutions with ATM facilities that operate both during and after regular banking hours are required to meet certain security requirements, to include adequate exterior lighting, automatic door-locking devices and video surveillance systems. All banks with ATMs covered by the Act are required to file an annual certification letter with the Department.

The audit found that in 2005, the Banking Department inspected only 58 percent of the 6,299 machines in 3,794 ATM locations statewide. The ATM Safety Act authorizes the Department to enforce the provisions of the Act, but does not require all ATM facilities to be inspected every year. The Banking Department’s internal procedures require their inspectors (12 part time and one full time) to inspect every bank ATM facility across the state. Many of the locations, due to their physical layout, require both day and evening inspections in order to evaluate compliance with standards. Rather than scheduling inspections based on risk, inspections are currently assigned in batches of 60 grouped by zip code.

The audit also found:

  • The Department did not have a complete list of all ATMs in the state covered by the Act;
  • Inspectors did not always follow proper inspection procedures to evaluate exterior lighting;
  • Some banks did not file an annual certification letter;
  • Current inspection procedures for evaluating video surveillance systems were inadequate;
  • The Department did not always notify banks of safety violations in a timely manner; and
  • There is no policy for determining how fines are levied against banks for non-compliance.

The Banking Department generally agreed with the findings of the audit and agreed to take immediate corrective actions to improve oversight of bank ATMs in the state. The Department is also conducting a feasibility study to determine if a risk-based inspection scheduling process can be developed that is consistent with the intent of the law.

Click here for a copy of the audit.


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