Wire Transfer Red Flags

By Joanne McDaid, CFCS

Cybercriminals are getting more aggressive in targeting money through wire transfer requests.  The number of attempts is on the rise and scammers are getting bolder and more sophisticated in their efforts to trick consumers into wiring funds.  Criminals like to use wire transfers because the money moves fast and is difficult to get back. *While you can’t always stop your customers from being victims of wire transfer scams, you can help minimize wire transfer risk to your institution by having the right controls in place.

First and foremost is developing adequate policies and procedures. This may seem like a basic concept; however, many organizations lack the appropriate written procedures. An institution’s procedures should carefully specify how incoming and outgoing wire transfers should be processed, how entries should be posted and balanced, and employees’ responsibilities for implementing these policies.

In addition individuals responsible for accepting and verifying wire transfer requests should be coached to the skeptical and trained to spot potential red flags. Encourage them to question when something seems out of the ordinary. Employees should learn to trust their instincts.

Below are some wire transfer red flags to be shared with employees to help prevent fraud from impacting your organization:

  • Wire transfers are not typical customer account activity.
  • Urgency or secrecy for sending wire, especially on Friday.
  • Details contain multiple countries and/or include multiple currency exchanges. i.e. U.S. originator sending EUROs to Hong Kong for Hong Kong dollar account.
  • Recurring wire transfer bank details suddenly change.
  • Purpose of payment is inconsistent with customer account activity.
  • Purpose of payment is inconsistent with wire details.
  • Sending wire transfer to pay for vacation rental or eBay items outside normal credit card, PayPal or thru rental property website.
  • Wire transfer is to known secrecy offshore tax haven country (i.e. Cayman Islands, Panama, British Virgin Islands, & Lichtenstein).
  • Dollar amount of wire is just under regulatory reporting requirement of $10,000.
  • Customer/Member sending multiple wires within short time period to same beneficiary.
  • Beneficiary claims wire transfer not received customer decides to send another wire without any research to verify original wire did not arrive.
  • Communication is only through email
  • Phone number contact within email does not match customer records on file with the bank.
  • Large dollar wire requests to high risk “scam” countries (i.e. China, Hong Kong, Russia & Nigeria)
  • Customer receives inbound wire or deposits check and immediately wires funds out domestically or internationally.

*Please note this document is intended for general information and educational purposes. Transactions may not be indicative of wire fraud and/or money laundering if they are consistent with a customer’s/member’s legitimate business.