Disaster Relief
Leadership Is Critical to Prepare for, Respond to, and Recover from Catastrophic Disasters:
preparing for, responding to, and recovering from any cata-strophic disaster, the legal authorities, roles and respon-sibilities, and lines of authority at all levels of government must be clearly defined, effectively communicated, and well under-stood to facilitate rapid and effective decision making. … to integrate and define what needs to be done, where, and by whom (roles and responsibilities), how it should be done, and how well it should be done -- that is, according to what standards.
GAO Report GAO-07-835T 'Homeland Security: Observations on DHS and FEMA Efforts to Prepare for and Respond to Major and Catastrophic Disasters and Address Related Recommendations and Legislation' – 15 May 07
Financial Controls and
Disaster Relief
Oxymoron or Realistic Objective?
By S. D. Skip Booren
Background
Catastrophic disasters (whether natural or man-made), impact thousands of individuals, families, and businesses. These events disrupt daily activities, force people from their homes, limiting access to businesses, banks and other financial institutions creating havoc and chaos. Sometimes the impact is short-lived, but often recovery can take weeks, months and even years.
Very public and tragic events, like Hurricane Katrina and its failing recovery, have highlighted the level of human devastation that can occur, and emphasized the need for well-planned assistance to mitigate individual suffering. Unfortunately, disasters like Katrina, that impact thousands of people, also provide fertile ground for fraud, waste, and abuse. In these instances it is not uncommon for normal financial controls to be swept aside in favor of quickly providing the needed assistance. Exigencies like this leave government agencies like FEMA vulnerable to charges of abuse of public funds.
Controls and accountability mechanisms help to ensure that resources are used appropri-ately. Nevertheless, during a catastrophic disaster, decision makers struggle with the tension between implementing controls and accountability mechanisms and the demand for rapid response and recovery assist-ance. On one hand, … quick action could not occur due to procedures that required exten-sive, time-consuming processes, delaying the delivery of vital supplies and other assistance. On the other hand FEMA's processes assisting disaster victims left the federal government vulnerable to fraud and the abuse of expedited assistance payments
GAO Report GAO-07-835T
Financial controls in times of disaster recovery DO NOT have to wait until post recovery audits to determine if fraud or waste has occurred. They can be in place before the first dollar of relief is provided and tracked concurrently with relief operations, IF appropriate mechanisms, systems and tools are in place.
In instances of natural disasters like hurricanes, recovery efforts can begin even before the predicted storm makes landfall, with the mobilization of resources, agencies, and pre-staged materials and equipment.
Two key elements to disaster relief financial controls are
- Identifying victims who qualify for financial relief and to ensure only qualified individuals receive funds thus minimizing opportunities for duplication of monies granted, and
- Tracking spending to ensure monies are spent on appropriate relief activities.
Following Hurricane Katrina, in an effort to expedite getting initial recovery funds into the hands of people in desperate need, FEMA and the American Red Cross provided pre-loaded debit cards, funded with $2,000 on each card in lieu of cash payments. Unfortunately, there was no adequate mechanism in place to prevent fraudulent applications or duplicate payments.
We estimated that through February 2006, FEMA made about $600 million to $1.4 billion in improper and potentially fraudulent payments to applicants who used invalid information to apply for expedited cash assistance.
GAO Report GAO-07-835T
In the wake of Hurricane Katrina, FEMA issued $2,000 debit cards to over 60 registrants who provided Social Security Numbers that were never issued or belonged to deceased individuals. We also found that FEMA made multiple expedited assistance payments to over 5,000 of the 11,000 debit card recipients. That is, FEMA provided the registrant both a $2,000 debit card and a $2,000 check or electronic fund transfer.
We found that while debit cards were used predominantly to obtain cash, food, clothing, and personal necessities, a small number were used for adult entertainment, bail bond services and weapons purchase, which do not appear to be items or services that are essential to satisfy disaster related essential needs.
GAO Report GAO-06-403T
A Proposal to address the Issues of Fraud Prevention and
Expedited Relief Payments
Debit cards are an ideal instrument for quickly getting Disaster Relief funds in the hands of hurting disaster victims, while minimizing the security challenges associated with handling large quantities of cash. With appropriate controls, processes and procedures in place, debit cards can be quickly disbursed, spending activity tracked, and limits placed on daily spending or on merchants where the card can be used. When these cards are also branded with the VISA or MasterCard logo, they enjoy wide acceptance and are thus convenient for use in obtaining necessities like food, clothing, transportation, shelter, etc. Purchases from Merchants providing nonessential disaster relief services may be declined by the server by using Merchants SIC code.
The Solution
“With regard to balancing speed and flexibility with accountability, FEMA has stated it can register up to 200,000 applicants per day for individual assistance while including safeguards for pre-venting fraudulent and duplicate applications. The inability to reliably and efficiently identify fraudulent and duplicate appli-cations was a major problem following Katrina that resulted in millions of dollars in improper payments.”
GAO Report GAO-07-835T
1. Enrollment
Enrollment of victims can be effected via mobile enrollment facilities located in vans or small RV’s and employing the Deposit & GO InstaDebit® Terminal, powered by SWORD® technology, supported by live debit card processing and Internet connections via a US Military Approved Vendor satellite phone/data link.
With this system, applicant information and IDs, if available, are quickly entered into the tracking database, and compared with information in the system’s databases to eliminate fraud and/or duplication. The “state of the art” Deposit & GO InstaDebit® Terminal offers:
“Plug-n-Play” Solution with Easy to Follow Graphic Touch Screens
- NO special “Installation Task Force” required
- Footprint JUST 2.6 sq ft NO huge terminal
- Short flat learning curve results in minimal operator training
Scans and Images Client ID in seconds
- Enables comparison of data to 28 Watch Lists, OFAC and FEMA databases or other custom black lists.
- OCR* w AI** reduces errors, eliminates key strokes & speeds entry
*OCR- Optical Character Recognition ** AI- Artificial Intelligence - Collects SSN with or w/o ID & compares to DB
Signature Capture & PIN Pad (PCI Certified)
Photographs Client
Collects Biometric of Finger (DOD Approved)
Encrypted Communications AES 265 140-2
Instant Issue STAR® flat financial Debit Card (non-embossed) with assigned Bank Account, PIN, client’s name and photo on the card. Under secure conditions, such as an armored vehicle, a branded card could be issued instantly.
This system can be easily integrated with the controls associated with FEMA’s Internet Application procedures.
Finally, catastrophic disasters not only require a different magnitude of capabilities and resources for effective response, they may also require more flex-ible policies and operating procedures. In a catastrophe, streamlining, simplifying, and expediting decision making should quickly replace "business as usual" and unquestioned adherence to long-standing policies and operating proce-dures used in normal situations for providing relief to disaster victims. At the same time, con-trols and accountability mechan-isms must be sufficient to pro-vide the documentation needed for expense reimbursement and reasonable assurance that resources have been used legal-ly and for the purposes intended.
GAO “recommended that DHS create accountability systems that effectively balance the need for fast and flexible response against the need to prevent waste, fraud, and abuse. Doing so would enable DHS to provide assistance quickly following a catastrophe and keep up with the magnitude of needs to confirm the eligibility of victims for disaster assistance …”
GAO Report GAO-07-835T
2. Accounting
Instant Issue STAR® Debit Card supported by a live debit platform and issued by partner “host” Bank comes with the following features to further minimize fraud and abuse, while protecting the individual client.
- Card may be used anywhere STAR® logo is displayed
- Card may be used at any ATM where STAR® logo is displayed with cash withdrawal limits established
by FEMA. With cash accessible at many surcharge-free Allpoint or Money Pass ATM networks covering
50 states. - Retail Point of Sale purchases (PIN based) with free cash back.
- Electronic Funds Transfer Deposits are controlled by FEMA
- Purchases can be controlled using Merchant Category Codes
- Daily or transaction based spending “limits” may be set for all transactions – based on pre-set business
rules - Cards may be “turned OFF”/deactivated at any time by FEMA
- Client has capability of turning card ON/OFF for personal security purposes using their cell phone
identified with the system on card activation - Client may choose to receive text message (SMS) to their cell phone and/or email notifications of
transactions on the card’s account – deposits, purchases, remaining balance, etc. - Available funds may be recovered by FEMA at any time
- All Star® Debit Card transactions are recorded in real-time for reporting purposes on a FEMA
controlled website - Customized “Potentially Fraudulent Purchases” Report available daily, weekly or monthly
Pilot Project – Proof of Concept
Since the underlying technology is highly scalable, it is possible to demonstrate the system with a small project involving a single Deposit & GO InstaDebit® Terminal and limited personnel. With validation, additional resources can then be acquired. The following would be required:
- FEMA approved as a commercial business account holder and applies for business account
- Partner “host” Bank approves FEMA business account
- FEMA moves desired funds into business account
- FEMA defines any custom reporting/control requirements
- SeeTek delivers Deposit & GO InstaDebit® and conducts training
- Deposit & GO InstaDebit® is connected to SWORD® live debit platform and delivered to disaster relief site and connected to Internet via a US Military Approved satellite data link connection, or DSL/Broadband
- Disaster clients are on boarded and are provided instant issue STAR® Photo ID Debit Cards loaded with appropriate funding
- After Action Audits validate processes and provide Corrective Action recommendations
A solution like this will demonstrate a proactive approach by FEMA to prevent potential fraud and/or abuse of public funds.
Who is Scan Enhance Envision Technology (SeeTek)?
Using check imaging (Check 21) as its cornerstone to image, authenticate and process paper checks, SeeTek's founder pioneered the design and development of an online, real time, check and ID authentication and acceptance patented solution. This solution that can be used with "instant issue" debit cards and employing SWORD® (" Scanned With Optical Recognition Devices") w AI technology focuses on the target market referred to as the "unbanked" or "under serviced" (Bank Challenged) market segment. SeeTek in its association with various providers brings a variety of financial services to the Bank Challenged including bill pay, cell phone top up, money orders, domestic and international money transfers. The SeeTek SWORD® Solution is compliant with all US banking regulations, i.e. Patriot Act, AML Act, Check 21, RDC and OFAC (Office of Foreign Asset Control). As well the servers are HIPAA certified.
Disaster Relief Fraud:
Lucie, Quin. “Establishing a Comprehensive Antifraud Plan for FEMA.” Journal of Homeland Security,” Dec 2007.
http://www.homelandsecurity.org/journal/Default.aspx?oid=167&ocat=1
Quin Lucie is a Disaster Assistance Employee Attorney with the Federal Emergency Management Agency’s Office of Chief Counsel. He received his undergraduate degree from Illinois State University and his law degree from Southern Illinois University. He received his officer’s commission from the U.S. Marine Corps in 1999 and served as judge advocate until entering private practice. He began his service with FEMA in 2006 and has since been deployed to Louisiana; Washington, DC; Mississippi; and New York. The views of the author do not necessarily represent those of the FEMA Office of Chief Counsel, FEMA, or the Department of Homeland Security.
Excerpt:
- In October 2006, Congress passed a law requiring that the Administrator of FEMA ensure that all programs within FEMA administering federal disaster relief assistance develop and maintain proper internal management controls to prevent and detect fraud, waste, and abuse. In addition, Congress mandated that FEMA develop and implement a program to provide training on the prevention of waste, fraud, and abuse of federal disaster relief assistance relating to the response to or recovery from natural disasters and acts of terrorism or other man-made disasters, and to find ways to identify such potential waste, fraud, and abuse.
- Various Government Accountability Office (GAO) reports estimate the amount of fraudulent or improper federal disaster payments after the 2005 Gulf Coast hurricanes under the Individual and Households Program alone at about $1 billion. This does not include fraudulent property claims or damage to FEMA-provided property by authorized and unauthorized occupants; those costs could drive this figure up significantly. A CNN report filed June 12, 2007, using on-camera interviews with FEMA personnel in Houston, placed the number of FEMA travel trailers rendered completely unusable by their occupants at roughly 10%. Using the approximate cost of $20,000 per trailer, this amount of damage, if accurate across the Gulf Coast, could reach $200 million. There is currently no process within FEMA to prosecute those responsible and receive restitution for this damage to federal property.
- By creating an integrated plan to combat FEMA fraud, reductions in the amount of fraudulent and improper payments under the Individual Assistance Program alone, for a disaster on the scale of Hurricane Katrina (approximately 2.5 million applications for individual assistance), could save FEMA and U.S. taxpayers hundreds of millions of dollars. Current efforts to combat FEMA fraud have focused only on making it more difficult for future applicants to file fraudulent or improper claims….
SWORD® Pro-Active Fraud Controls
SeeTek has developed a method which allows it to:
- Scan and authenticate, via OCR with AI, a personal, government, or payroll paper check and then convert that check into an electronic
deposit using Check 21/Remote Deposit Capture rules - Scan and authenticate, via OCR with AI, the ID presented by the person cashing the check
- Load the check (or cash) into an instant issue FDIC Bank Account or Prepaid Card Account
- Instantly print & issue a Photo ID Debit Card with funds immediately accessible to the new card holder at any ATM or retail POS terminal for
payment of goods and services - Offer other financial products loaded on the terminal for sale to the cardholder i.e. Prepaid Long Distance, Wireless, International Money
transfers, Bill Pay, etc.
The SeeTek solution, dubbed Deposit & GO InstaDebit®, is the only solution of its kind that offers a complete turnkey "plug-n-play" solution that satisfies all aspects of current US bank regulations:
- Patriot Act, consults the US OFAC (Office of Foreign Asset Control) list, 28 international watch lists of persons & companies as well as custom black lists
- Anti Money Laundering Act (AML Act), consults 28 international watch lists and authenticates the identity of the bank, payor, and payee
- Check 21 (electronic check presentment of check to bank for deposit)
- Remote Deposit Capture (RDC), Deposit & GO InstaDebit® Terminal acts as a remote branch of the sponsor bank. Paper check is imaged, voided and returned to client. An electronic image of the check is the sent to the sponsor bank to be forwarded for processing to the issuing bank.
Optical Character Recognition (OCR) & Artificial Intelligence (AI)
Working in tandem, OCR with AI is employed to forensically read, compare and "authenticate" data from scanned checks, Driver Licenses, Military ID, and State ID presented. In all, 3,800+ different government issued ID types may be scanned. OCR with AI eliminates teller/operator interaction with the keyboard, populating relevant fields, and speeding up data entry.
Scan Enhance Envision Technology, LLC
283 Cranes Roost Blvd
Suite 111
Altamonte Springs, FL
32701
702-490-6031
www.SeeTekCorp.com
SWORD® Technology (formerly) Registered with:
United States & Canadian Governments & NATO
Dept of Homeland Security (DHS)
Certified Contractor:
US/CDN Joint Certification Program, Defense Logistics Information Service
Download SeeTek Deposit & GO Solves DIsaster Relief Rev