FEATURE

Business email compromise schemes

HOW TO AVOID BECOMING AN UNWILLING PARTICIPANT Shauna Woody-Coussens, CFE, is a Managing Director in BKD, LLP’s Forensics & Valuation Services practice

A business email compromise scheme targets a financial institu- tion’s commercial customers. A fraudster may gain access to (com- promise) the email account of a commercial customer’s employee and send fraudulent wire transfer instructions directly to the financial institution. Or, the fraudster may compromise or “spoof ” the email of the commercial customer’s CEO, CFO or a long-time vendor and send an email to the commercial customer’s account- ing personnel instructing them to institute a wire transfer to a new partner or vendor or to a new bank account for an existing partner or vendor. Te email seems perfectly normal in format and the language is similar, if not identical, to previous emails of the same type. So, the financial institution sends the wire or the corporate accounting employee instructs the financial institution to send the wire. Te problem is, the email came from an outsider, a fraudster. One of my clients was recently victimized in this manner.

It resulted in the organization paying nearly $600,000 of funds owed a legitimate vendor for legitimate services to a fraudulent bank account. Te fraudster pretended to be the CEO of a large vendor and emailed my client’s accounts payable employee request- ing a change to the vendor’s banking information. My client had no required verification procedures in place, so the change was implemented. A few days later, the legitimate vendor requested a large payment for actual services provided. My client paid the invoice, but the payment went to the fraudulent bank account. In hindsight, there were telling red flags, but unfortunately my client had not trained their employees to look for them. Tese types of fraud schemes, which rely on online ploys such

as spear phishing, social engineering, identity theft, email spoof- ing and the use of malware, appear to be on the rise. Te FBI indicated that this type of fraud has cost global businesses over $3.0 billion since 2013. Tis fraud can be difficult to defend against, but financial in-

stitution personnel can help. FinCEN Advisory FIN-2016-A003 recommends to be on the lookout for the following.

- lar or terminology, timing and amounts than previously verified and authenticated transaction instructions.

closely resembling a known customer’s email account. Pay at- tention to small variances like @abc.com versus @abc.net.

beneficiary, but the account information has changed.

foreign bank account.

to beneficiaries which have not previously received a wire pay- ment from that commercial customer.

is “secret”, “confidential” or “urgent”.

institution limited time or opportunity to confirm the authen- ticity of the request.

If you notice potential red-flags, multi-faceted transaction verifica- tion processes can help. Consider verifying the authenticity of the suspicious emailed transaction payment through multiple means of communication or by contacting others authorized to conduct transactions for the commercial customer. Always rely on your existing contact information for the commercial customer. Never reply to the email address or phone number accompanying the sus- picious request. It may take a little extra time to verify suspicious transactions, but it will be time well spent.

MIB Community BANKING 11