Wire fraud is a type of cybercrime that involves using electronic communications to obtain money or property by false or fraudulent pretenses. Wire fraud can affect anyone who sends or receives money electronically, but businesses that deal with international transactions are especially vulnerable. According to the FBI, wire fraud losses in the U.S. reached $1.8 billion in 2020, with business email compromise (BEC) schemes accounting for the majority of the cases. In Nigeria, on the other hand, according to the Financial Institutions Training Centre (FITC), a financial research and advocacy organisation operated by the Central Bank of Nigeria (CBN), Nigerian financial institutions have reported N159 billion in losses to fraud cases since 2020.
Wire fraud can have devastating consequences for businesses, such as financial losses, reputational damage, legal liability, and loss of trust. Therefore, it is essential for businesses to take proactive measures to prevent wire fraud and protect their assets. Here are some tips on how to do so:
Verify the identity and details of the sender
One of the most effective ways to prevent wire fraud is to verify the identity and details of the sender before sending any money. This means checking the email address, phone number, and bank account information of the sender, and looking for any signs of spoofing or tampering. For example, the email address may have a slight spelling error, such as “johndoe@examp1e.com” instead of “johndoe@example.com”, or the phone number may have a different area code or country code than expected.
If you receive a request for a wire transfer from a business partner, you should always confirm the request through a different channel of communication, such as a phone call or a face-to-face meeting. You should also use the contact information that you already have on file, rather than the one provided by the sender, to avoid falling for a fake or compromised contact.
Establish and follow a secure wire transfer protocol
Another way to prevent wire fraud is to establish and follow a secure wire transfer protocol for your business. This means having a clear and consistent process for initiating, approving, and executing wire transfers, and ensuring that all the involved parties are aware of and adhere to it. For example, you may require a written authorization from a senior manager, a dual approval from two authorized signatories, and a confirmation from the recipient before sending any money.
You should also review and update your wire transfer protocol regularly, and conduct periodic audits and tests to ensure its effectiveness and compliance. You should also train your employees on how to detect and report any suspicious or fraudulent activity, and provide them with the necessary tools and resources to do so.
Use a reputable and secure money transfer service
A third way to prevent wire fraud is to use a reputable and secure money transfer service for your international transactions. This means choosing a service that has a strong reputation, a high level of security, and a transparent and fair fee structure. You should also look for a service that offers features such as:
- Encryption and authentication: The service should use encryption and authentication technologies to protect your data and transactions from unauthorized access or interception.
- Fraud prevention and detection: The service should have fraud prevention and detection systems and policies in place to monitor and flag any unusual or suspicious activity, and to alert and assist you in case of a fraud attempt.
- Customer support and dispute resolution: The service should have a dedicated and responsive customer support team that can help you with any questions or issues, and a dispute resolution process that can help you recover your money in case of a fraud.
Some examples of reputable and secure money transfer services are TransferWise, OFX, and WorldRemit.
Conclusion
Wire fraud is a serious threat to businesses that send money overseas, and it can cause significant losses and damages. However, by following the tips above, you can reduce the risk of wire fraud and protect your business from cybercriminals. Remember to always verify the sender, follow a secure protocol, and use a reliable service when sending money overseas.