How to Safeguard Your Accounts Against Wire Transfer Fraud

From home buying to setting up new accounts with businesses, fraudulent activity becomes more and more relevant, and more possible. Due to the recent increase in wire transfer fraud activity, it’s more important now than ever to be aware of the warning signs that face financial institutions including banks and credit unions.

Banks need to be educated when it comes to preparing and handling possible wire fraud. One measure is to look into insurance for banks to protect against wire fraud, and another is to look out for certain risks by taking certain steps. Here are some of the best practices to prevent your accounts from becoming a victim of wire fraud.

Develop Adequate Policies and Procedures

Even though this seems like a basic concept to practice, there are some financial institutions that fail to comply. Many organizations lack the appropriate written procedures, opening them up to possible fraud risks. A bank’s procedures should carefully point out how incoming and outgoing wire transfers should be processed to how entries should be posted and balanced.

Ensure Proper Segregation of Duties

Dual control should be the basic process for all wire transfers. Acceptance and authentication of wire transfers should be separated from the processing and approving of each transaction. Separating duties may not always be the practical route for smaller banks and credit unions, but mitigating controls should be used as necessary as possible. This will ensure the proper checks and balances are in place.

Get Customer Verification

Customer verification is now essential and basic for all wire transfer processes. Customers previously were sensitive when asked to offer up additional identity verification, however this is no longer as much a burden. Now, this is a helpful way to protect from harm.

Watch for Red Flags

Banking customers and clients should be educated on how to be responsible for accepting and verifying wire transfer requests to be skeptical. Banks and credit unions should be encouraging when it comes to anything seeming out of the ordinary.

When the individuals are asked about their actions, they should be able to spot some red flags. Banks should make sure all their employees who are responsible for approving wires are trained and on top of performing their due diligence before leaving for the day.

Set System Limits

Banks should use any and all system limitations to aid in improving controls and consider limiting who can work on wire transfers. Make sure to review the wire transfer setup to ensure all of the proper system limitations have been implemented.

Whatever methods are chosen by banks to protect against wire transfer fraud, there should always be specific procedures performed.


About Financial Guaranty Insurance Brokers

Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.