Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Negative Verification

What it is:

Negative verification is a bank method for verifying bank records.

How it works (Example):

For example, let's assume Bank XYZ is performing an internal audit of the computer system that generates customers' monthly bank statements. To spot check the accuracy of the system, Bank XYZ might perform several tests, including contacting former and current customers. Bank XYZ might provide the customers with information it has on record for the customers and ask the customers to respond only if that information is incorrect.

Why it Matters:

Negative verification is often part of detecting fraud or identity theft, but it often puts the onus on the bank rather than the customer. With positive verification, the customer must initiate the contact with the bank if there are any suspected account mistakes; negative verification requires the bank to initiate the contact.

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