A Financial Institution Bond protects your business and clients against losses caused by the dishonest or fraudulent acts of an employee, such as embezzlement, forgery, misappropriation of funds, and more. In addition to consumer and balance sheet protection, this type of bond acts as a financial guarantee to regulators for the assets and investments held by a financial institution.
PROLINK’s Financial Institution Bond program also covers Social Engineering Fraud, in which hackers manipulate employees into voluntarily disclosing private information. Hackers typically use email, text, or other forms of communication to impersonate high-ranking executives or other key personnel and demand immediate action, such as confirming financial details, providing payment instructions, or even transferring funds. If employees aren’t aware, they could inadvertently leak data or compromise your entire network, leading to regulatory compliance violations, as well as major financial, legal, and reputational harm.
Social Engineering Fraud is generally included under most Cyber Insurance policies; however, depending on your current cybersecurity controls and the industries you serve, insurers may opt to decline or exclude this coverage for those working in the financial space given the high likelihood or attack.
- Complies with all requirements under National Instruments 31-103 for firms registered as either Investment Fund Managers, Restricted Portfolio Managers, or Exempt Market Dealers;
- Complies with all relevant Provincial Securities Commissions (OSC, ASC, BCSC, etc.) and Regulators (i.e. SRO, the new merged entity that includes IIROC and MFDA);
- Can endorse multiple entities under one bond;
- Simple application process: members can benefit from a quick turnaround from an insurance broker who understands your business.
Why do we recommend it?
Depending on the professional services you provide, you might be required to carry a minimum Financial Institution Bond by various regulatory bodies. Our program can help you secure the appropriate coverage for every regulatory jurisdiction where you’re domiciled and ensure compliance with any other agencies that require you to carry a bond, like the Self-Regulatory Organization of Canada (SRO), the new merged entity that includes the Investment Industry Regulatory Organization of Canada (IIROC) and Mutual Fund Dealers Association (MFDA).
But even if you’re not required to have it, a Financial Institution Bond is still critical to protect against insider actions, both intentional and unintentional. Most business owners tend to focus on external threats, but the reality is that internal fraudsters, especially trusted employees, can often go unnoticed since they know exactly where sensitive information is located, how much it’s worth, and how to bypass security measures. The bottom line? Even the most well-managed companies are susceptible to workplace fraud and any financial services firm that has employees handling confidential information should consider this coverage as a standard part of their risk management strategy.
Additionally, with cybercrime at an all-time high, a Financial Institution Bond can help you mitigate the impacts of human error. Social engineering scams and phishing emails have become incredibly sophisticated and convincing; even your most vigilant employees could accidentally divulge their login credentials or other confidential data, especially if they’re distracted or working quickly. Social Engineering Fraud coverage can supplement your existing Cyber Insurance to protect you more comprehensively, offset financial loss, and ensure data loss doesn’t destroy your reputation.