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Embracing What If: When wire fraud happens

Really, that statement is about getting us to seriously consider the “what if.” For instance, “what if I suffered a data breach;” or, “what if, despite my best efforts, a criminal somehow managed to divert a wire to a fraudulent account?” Thinking about the “what if” is uncomfortable, particularly when it comes to wire fraud. We spend most of our time and effort figuring out how to avoid the “what if” scenario. The thing is, when it comes to attempted wire fraud, experience tells us that title agents who’ve spent time planning for “what if” are the ones who tend to get the money back. We all hope that funds are never misdirected by a fraudster. However, even the best-prepared companies in the world fall victim to fraud, so we can expect agents and underwriters to fall victim as well. We recommend agents create an Immediate Response Plan for the minutes and hours after discovering a diversion of funds. We know many agents who’ve managed to recover all, or at least a portion of lost funds by quickly relying on such plans when fraud was discovered. The most successful Immediate Response Plans are those established well in advance and communicated to staff members and the agency’s bank. Plans will vary, but here are some important points to remember:
  • Minutes count: Staff members should notify management the moment suspicion arises that a wire may have been misdirected. A swift response is critical to stopping the fraud.
  • Your relationship with your bank is critical: When funds are diverted, your bank may be your first and best hope of either stopping or reversing the wire. Agencies that have established a close relationship with their bank and that continually dialog with the bank regarding fraud threats have a better chance of recovering funds. Some agents work with their banks to discuss wire retrieval scenarios and establish emergency contacts, often in the bank’s fraud department, whom they can call at a moment’s notice day or night.
  • Freeze the funds: An agent’s bank can be an important advocate with the beneficiary bank in a wire transfer. If funds have been transferred and cannot be recalled, ask your bank to formally request that the beneficiary bank freeze the funds. Some agents also have had success freezing funds by directly contacting the beneficiary bank.
  • Contact local law enforcement: Contact local police in your jurisdiction and the jurisdiction of the beneficiary bank.
  • Contact your local FBI office: The FBI, working with the U.S. Department of Treasury Financial Crimes Enforcement Network, might be able to help return or freeze the funds. Contact information for local FBI field offices is available at www.fbi.gov/contact-us/field-offices.
Creating a plan doesn’t have to be complicated. To help, we’ve developed a fillable PDF contact sheet where you can enter the phone numbers for your bank’s fraud department, your local FBI field office and other information you might need at your fingertips if a wire is diverted. Agents have told us that having such information next to the phone can be a lifesaver in a wire fraud scenario. Alliant National recently produced a white paper on escrow fraud as part of our ongoing effort to inform agents about the threats we all face. The paper provides additional information on how to structure a wire fraud Immediate Response Plan. Thinking about “what if” isn’t much fun. But when wire fraud happens, a good plan, swiftly executed, can be the best hope of avoiding an even more uncomfortable scenario: “game over.”

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Nathan Marinchick

Alliant National's director of research + educational programming

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This blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on this blog.

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