It is my assumption that large accounts, such as investment funds, or superannuation accounts, have insurance against fraud or theft. How does the insurance work? What would happen if a large amount of cash (say $100,000,000) went missing from one of the accounts?
Please excuse the simplicity and naivety of the question, insurance and finance aren’t my realms.
Note: Not looking to steal, I’m an aspiring writer.
In: Economics
Money doesn’t “go missing” from an account, particularly in that amount. Banking software is highly regulated, and routinely audited by government.
If any amount is missing from your account, the transaction logs are scrubbed to see where it went and who authorized it to be moved like that. You might lose it, if the transaction was done with your authorization. The bank might lose it, if it was not. Banks make up losses from their profits, stealing is a cost of doing business.
You’re going to need a very, very unusual situation to have 9 digits of money in an account. When you get middle-5-digits in an account, the bank starts contacting you to see what’s up. Any transaction over $10K requires separate government reporting, as part of anti-money-laundering statutes. If it’s a $50K wire transfer to a real estate escrow company for the down-payment on a new house, the FBI Financial Crimes folks might look the other way, but every 6-digit transfer is examined by a human. A 9-digit transaction probably turns on red rotobeams and sirens in some FBI office.
Basically I’d fraud or theft happens the insurance just pays out. But, for numbers like that they will push the police and do their own legwork, find where that money went and get it back. It’s very hard to steal cash out of a bank account, can’t do cash as millions is just not happening, and electronic can just be reversed a week later.
Second, insurance will require the account implement fraud/theft protection, that means regular audits to check for fraud (and catch it before it’s big), and background checks and controls so people who want to steal don have access.
You must have crime coverage in some part of your property policy, especially employee theft as employees are the most likely to steal given the opportunity. You must have safety controls in place or you won’t even get this coverage. Just like any other claim, they’ll see if it is from a covered cause of loss. If it is, then it’ll pay out up to the limit of your policy. $100M is a very high amount, I would be shocked. Insurance won’t pay out on claims that will devastate the company.
I work in the commercial insurance industry. Let me know if any questions for me, anyone else or otherwise based on this. There’s a lot missing here in my response even. It’s all very technical based on the policy if you are going to write about it.
Tbh there probably isnt a bank account anywhere with $100 mil in cash. When at these sums, people put the money into assets. Nowadays those assets are usually securities (stocks, bonds, derivatives). If cash holdings go missing from an account, there must be a transaction (wire transfer). If securities go missing from an account, there must be a transaction (sale in open market). The account provider must be able to prove funds moved for the funds to move, or you will win your money back from the bank in court. If there was an unauthorized transaction due to fraud, the bank usually isnt liable, but sometimes they are.
Also holdings like this arent usually held in a bank account per se, they are often held as paper. There are plenty of $10 million paper treasury bonds (bearer bonds) that can be redeemed after expiration at the treasury. These types of securities are how people store large wealth without the use of a bank.
I know it doesn’t answer your question really, but this info might add to your writing!
edit: [this SEC link has info on security holdings
](https://www.sec.gov/reportspubs/investor-publications/investorpubsholdsechtm.html)
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