The #1 Tool for Recovering Diverted Funds: Your Wire Fraud Response Plan
Every wire fraud defense expert says the number one factor in recovering diverted funds is time. Every minute counts when fraud has been detected, and hesitations or delays can impede efforts to track down and restore lost funds.
That’s why a Wire Fraud Response Plan is imperative for every title agent.
Before you create your plan, or if you are undergoing a review of your current plan, we encourage you to download Alliant National’s recently updated Escrow Fraud/Social Engineering: Recent Schemes and Prevention Tips white paper. This 23-page guide provides an in-depth review of the current schemes and offers a wealth of tools and resources for building a strong defense against fraudsters.
Here are some things to consider when creating your response plan.
Elements of a Wire Fraud Response Plan
The first step in preventing wire fraud is to maintain policies and procedures for verification of wire instructions for the protection of everyone involved in the real estate transaction.
But should the unthinkable happen, remember that the most successful response strategies are those established well in advance and communicated to staff members and your bank.
Like a well-trained sports team, every member of your team must know their role and be prepared to leap into action.
- Establish a close relationship with your bank representatives and continually dialogue regarding updated fraud threats.
- Discuss wire retrieval scenarios and establish emergency contacts in the bank’s fraud department, whom you can call at a moment’s notice day or night.
- Download and fill in the Wire Fraud Contacts form in our Escrow Fraud/Social Engineering white paper and provide it to staff members charged with addressing suspected fraud.
- Notify management the moment suspicion arises that a wire may have been misdirected.
- If funds have been transferred to the receiving bank and cannot be recalled, ask your bank (the sending bank) to formally request that the receiving bank freeze the funds.
- Agents may also attempt to directly contact the receiving bank to ask that the funds be frozen.
- Contact local police in your jurisdiction and the jurisdiction of the receiving bank.
- Report the fraud immediately to your local FBI office.
- File a complaint with the FBI’s Internet Crime Complaint Center (IC3).
- Contact the underwriter involved in the transaction. Alliant National is available to help you evaluate the situation.
- Contact your corporate attorney to let him or her know about the events taking place.
- Depending on the nature of the fraud, contact the appropriate insurance provider (Cyber-Liability, Escrow Security Bond or Errors & Omissions).
Putting all of these resources in motion immediately can be extremely useful, as anyone of these professionals or organizations may have information that could assist you in recovering your funds.
IC3 may be one of your most important contacts. In 2018, IC3 established its Recovery Asset Team (RAT) to streamline communications with financial institutions and FBI field offices to assist freezing of funds for victims.
In 2021, RAT initiated the Financial Fraud Kill Chain (FFKC) on 1,726 Business Email Compromise (BEC) complaints involving domestic to domestic transactions with potential losses of $443,448,237. A monetary hold was placed on approximately $329 million, which represents a 74% success rate.
The efficiency of this organization’s work is largely dependent on the speed with which they are advised, so it’s critical that they be an important part of your Wire Fraud Response Plan.
Even the most vigilant companies may fall prey to fraud, but putting protocols in place can greatly reduce your exposure and give you a pathway to recovering lost funds.
As always, call your Alliant National underwriting team if you have any questions or concerns. We are here to help!