CCUL Headlines: Compliance

Strategies for fighting business email compromise (BEC) fraud

Monday, September 11, 2017   (0 Comments)
Posted by: Verafin Blog
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Editor’s Note: This article was originally featured on the Verafin blog on July 12, 2017 and has been modified.

Business Email Compromise (BEC) has become a big earner in the criminal world and a serious fraud threat for financial institutions (FIs) and their corporate customers. It is a threat serious enough to prompt the FBI, in May 2017, to release an updated Public Service Announcement (PSA) regarding the continued growth and evolution of the crime.

What is Business Email Compromise (BEC)?

BEC is a fraud scam that targets businesses, ranging from small to large corporations. As it has evolved it has taken on numerous forms. However, it typically involves a criminal either accessing or mimicking the email account of a high-ranking official at the business to instruct another member of the company to initiate a large transfer of funds, via wire, to an overseas location. Based on information collected by the Internet Crime Complaint Center (IC3), prominent wire transfer destinations include FIs in China, Hong Kong, and the UK.

Key indicators of BEC:

  • Large wire or funds transfer to a recipient the company has never dealt with in the past.
  • Transfers initiated near the end of day (or cut off windows) and/or before weekends or holidays.
  • Receiving account does not have a history of receiving large funds transfers in the past.
  • Receiving account is a personal account, whereas the company typically only sends wires to other businesses.

Strategies for preventing BEC:

  • Targeted training of key financial officers for your business and corporate clients.
  • Callback procedures for certain fund transfer types.
  • Training for internal staff (Account Managers, BSA, Fraud, Wire Room, etc.) to identify BEC.
  • Detection systems that profile both sending and receiving accounts of a funds transfer to ensure the activity is typical for both parties.

For criminal organizations, BEC translates into big money for comparatively little work. As long as the potential exists to defraud your business customers, criminals will continue to evolve their techniques to avoid detection, and maximize their profits. However, knowing the key indicators and having strategies in place to combat the crime, you can protect your customers from the potentially devastating impact of BEC.

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