- 37 -
time from its accounts, through the Federal Reserve System (the
Federal Reserve), to the destination financial institutions.19 (The
software also permitted transfers from other institutions to
Norwest.) During the years in issue, NTS was engaged in many
projects20 designed to address Federal Reserve regulatory changes
and Norwest's business needs. (Norwest was experiencing a large
growth in the wire transfer business--20 percent or more per
year.21)
19 To effectuate a wire transfer of funds, Norwest set up
a contra account (also known as a due-to/due-from account) with
the Federal Reserve. When a Norwest customer wanted to make a
transfer, Norwest would debit the customer's account and credit
its own account at the Federal Reserve. The Federal Reserve
would then debit Norwest's account and credit the destination
institution's account. This procedure was used for all domestic
wire transfers; international wire transfers did not go through
the Federal Reserve.
Initially, the wire transfer system used by Norwest did not
provide for international wire transferring of funds.
International transfers occurred through other, antiquated,
systems which were manual and paper based. Norwest converted the
international wire transferring to the MoneyNet system, which
provided on-line, real-time transfers and validation. This was a
large project that took several months of work.
20 Some of the smaller projects included additions and
changes to the screen and reporting functions of the system.
21 Norwest was processing approximately $5 to $7 billion
in wire transfers per day. The expansion of this business raised
critical security issues that had to be addressed any time new
technology was instituted. (In fact, Norwest was the victim, on
at least one occasion, of a fraudulent wire transfer ring that
infiltrated the system.) Thus, any software development was
constrained by security concerns.
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