26 NOVEMBER / DECEMBER 2020 IBA INSURANCE SOLUTIONS Wire Fraud Keeping customers safe in a remote environment These days more people are working remotely than ever before, and many tasks previously done in person are happening online, including banking. Unfortunately, fraudsters are aggressively taking advantage of potential vulnerabilities that arise from this increased online activity. Businesses are acclimating to the current unusual circumstances by offering additional services virtually. For community banks, this means working with customers by email or online, allowing electronic signatures on important documents, among other virtual services, which opens up the door for an exposed environment. Should these cyber criminals gain access to personally identifiable information (PII), they can easily pose as the bank customer, another financial institution, another party to the transaction or someone else within the bank looking to transfer funds. While wire transfer fraud is certainly not a new source of loss for community banks, criminals have been exploiting the increase in electronic and remote banking and are constantly finding different ways to perpetrate this type of fraud. It’s extremely important, therefore, to stay vigilant while customers and employees are remote. Last spring the Indiana Bankers Association formed a new insurance partnership, IBA Insurance Solutions (IBAIS), to provide much-needed insurance expertise to members. IBAIS can help your bank with any type of insurance that your bank may need, such as FI bond, D&O, cyber, PC, collateral protection and employee benefits. Our first year was quite a success, as we were able to help many Indiana banks both improve coverage terms and lower their premiums. Please keep us in mind if we can help your bank in any way, such as reviewing, quoting and advising. We’re now happy to announce that IBAIS will have a column in each issue of Hoosier Banker, where we plan to share timely risk management and insurance-related advice. This issue’s article focuses on wire fraud and is written by my good friend, Craig Collins of OneBeacon Financial Services. By a large margin, wire fraud losses are the ones that we see most. Please read Craig’s piece below, and be certain to prepare your bank for this exposure. Security alert – wire transfer fraud involving real estate loan proceeds. There has been a significant uptick in wire transfer fraud schemes involving real estate loan proceeds and wire transfer instructions purportedly from a title attorney/agent or someone else in the bank. Transfer requests and wire transfer instructions are coming in via phone, fax and email. Whenever requests and instructions are received via phone, fax or email – whether from a customer, another financial institution, a title attorney, a real estate agent or even someone else in the bank – consider having employees follow the same out-of-band verification procedures that would be performed on any other wire request. That involves not only the initial request and instructions, but also any change in the request of instructions (e.g., when new receiving bank account information is received). Perform a wire transfer risk management checkup. Review the requestor’s account, and confirm that the bank has a written agreement with the customer authorizing the bank to transfer funds on deposit in reliance on instructions received via phone, fax or email. Other considerations may include: • Is it unusual for this customer to request a wire transfer? Chuck Maggard President/CEO IBA Insurance Solutions cmaggard@inbankersins.com IBA Insurance Solutions is a Preferred Service Provider and subsidiary of the Indiana Bankers Association.
RkJQdWJsaXNoZXIy MTg3NDExNQ==