Crossed Wires

Keys to Reducing Wire Transfer Fraud


By By James Incaprera, CFSSP, CPP,;and Joyce C. Lambert, Ph.D., CIA, CPA

The five young men were living the good life as they tooled around New Orleans in their pick of luxury cars – a Lexus SUV, Cadillac Escalade, Range Rover, Mercedes Benz, a Jaguar. But the opulence ended when the FBI and the U.S. Postal Service seized the vehicles and shut down their lucrative scam. Using fake wire transfers, the five had allegedly stolen more than $500,000 from the accounts of American Airlines, Avis Car Rental, Walgreens, and other large corporations. According to federal authorities, the men allegedly had set up accounts with two legitimate third-party companies that process electronic payments. Using stolen bank numbers from the large corporations’ accounts in Chicago, Atlanta, New York, and New Orleans, they purportedly used the third-party payment processors to debit the corporate accounts, which they claimed were their clients and owed them money, authorities said.1  

Wire transfers of funds are nothing new – they began in the United States in the 1940s. However, with today’s growing emphasis on a cashless society, wire transfers increased by 200 percent just in 1998. Not surprisingly, wire transfer fraud also has increased by 70 percent since 1995.

Typically, fraudsters who commit this type of crime are knowledgeable about wire transfer activity, have at least one contact within the target company, and are aggressive in carrying out the theft.

Instantaneous Transfer 

Wire transfer services electronically move funds worldwide from a financial institution to a beneficiary account at any banking point according to a customer’s instructions. (A banking point is any institution or business capable of receiving electronic transactions such as banks, savings and loans, credit unions, brokerage firms, and insurance companies.) On any day, $1 trillion to $2 trillion moves among financial institutions.

 

 

 

 


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