Pub. 1 2010 Issue 4

www.wvbankers.org 16 E ven when procedures are followed carefully, banks and their customers can still suffer a loss, such as in this following real example: A community bank and several of its customers were targeted in a rela- tively straight-forward scam. A caller purporting to be a legitimate bank customer contacted the bank, asking that the customer’s home and busi- ness phone numbers be changed. The imposter apparently provided satisfac- tory security information to the bank’s customer service representative, who thereby completed the request. Several days later, a person posing as the customer called to request a transfer of funds between accounts and a corre- sponding international wire transfer of over $350,000. The bank representative, following the bank’s standard wire trans- fer verification procedures, instructed the caller to fax a signed wire transfer request to the bank, which the imposter did immediately. Before the wire was sent, the bank placed a verification phone call to what they believed was the valid phone number of the account holder. They received confirmation and sent the wire. Days later, a second victim was tar- geted. Earlier, the victim’s phone and fax numbers were changed as they had been in the first case. A caller claiming to be the valid account holder request- ed a wire transfer. The bank, again following procedure, faxed a wire transfer request form to the caller. The person called back the next day stat- ing he had not received the form. He provided an alternate fax number and ultimately received the form. It was completed and faxed back to the bank. However, because the request form was apparently faxed to an alternate number, the bank took the additional step of comparing the signature on the form with the signature card used to open the account originally. Noticing the signatures did not match, the bank called the customer using the phone number on the signature card—NOT the number in the bank’s computer sys- tem (which had been changed)—and the fraud began to unravel. A similar attempt on a third victim was subse- quently thwarted. It can be difficult to detect fraudulent activity. Sometimes even the most benign event can be the start of a seri- ous problem. Here, the bank followed their verification procedures and still suffered a loss. While it is impossible to prevent all criminal activity, a bank’s best defense is to educate frontline employees to be on the alert for suspicious or un- usual activity and immediately bring it to their supervisor’s attention. For instance, does the transaction follow the pattern of typical account behavior? The victim in this case was a longtime customer of the bank and had never wired money at all during their rela- tionship, let alone internationally. The old adage “know your customer” continues to be relevant, even in today’s electronic age. Encourage your staff to ask questions and explain the recent scams that are being reported in the industry. Q Beware of Fraudulent Wire Transfer Requests Loss control article from ABA Insurance Services To learnmore about this program, please contact Jason Faulkner, Senior Account Executive at ABA Insurance Services, at 1-800-274-5222 or jfaulkner@abais.com . Despite increased vigilance by banks in recent years, fraudulent wire transfers continue to be an on-going problem in the banking industry.