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Bank accounts 06 Aug 2018

Wiring money and the rise of Business and Email Account Compromise

In May 2018, the Federal Bureau of Investigations released its 2017 Internet Crime Report from its Internet Crime Complaint Center, or IC3. According to the report, in the last year, $1.42 billion in total losses was reported, all attributable to Internet crime. The crime reporting the biggest monetary loss was related to Business Email Compromise/Email Account Compromise (BEC/EAC).

picture of hands exchanging money, charts BBVA

The statistics underscore a growing trend in internet crime - targeting the email accounts of reputable companies that conduct business via the transfer of money through wires. The fraudsters garner access to legitimate email accounts through nefarious means, like account hacking, then send emails to unsuspecting victims requesting the transfer of money to a bank account the fraudsters have set up. Due to the legitimacy of the email, victims of this scheme do not typically question the instructions, resulting in the loss of thousands of dollars. An increasingly common scenario for BEC/EAC is real estate transactions, where money is requested by an agent to a purchaser who then sends money via wire to the fraudsters account to settle the transaction.

Those wiring the money in this instance can avoid the fraud by simply confirming the wire instructions with their contact. Doing so by phone is sufficient, but in person when possible is always better.

To understand why the onus is on the person sending the wire, and not the wire transfer agency, it’s important to understand how wires work.

A wire is the electronic transfer of money from bank to bank, using a network, such as SWIFT or Fedwire. Wire transfers are particularly useful to conduct business as the funds are transferred quickly, typically within one to two days. Additionally, because the funds are “guaranteed,” there are no holds placed on them, which means they can be accessed and used the same day they are received, so long as the receiving institution clears them in a timely manner.

The person sending the wire provides the bank with wire transfer instructions that include:

  • Name of recipient’s bank
  • Recipient bank ABA number or other code
  • Payee’s account number at the bank

The recipient of the wire can and should provide this information to the sender. But be warned - the sender should always confirm the veracity of the instructions over the phone or in person with the recipient so as to not be caught in a BEC/EAC scheme. Senders should not rely solely on emailed instructions.

In large part, this is because once the funds are transferred by wire, they can not be reversed. Also, because the funds are available quickly, if a fraudster withdraws the money in cash or transfers it out of the receiving account, it’s difficult, if not impossible to retrieve. Further, because the sender is instructing the bank on where to send the money, the liability is on their shoulders, as opposed to the wire agency sending or receiving the money.

Wires when used properly are a convenient and quick way to send money. But, as with any money transfer, caution should always be employed in order to steer clear of fraudsters whose intent is to commit crime.

For more on how to make a wire transfer at BBVA Compass, click here.