Crime syndicates hijacking bank payments meant for suppliers

Gail Carver, head of commercial crime at Etana Insurance

Specialist business insurer, Etana, has seen a sharp increase in commercial crime losses caused by assumed-to-be-genuine letters from masquerading suppliers notifying businesses of changes in their banking details, reveals Gail Carver, head of commercial crime at Etana Insurance.

She appeals to financial advisors to warn their clients and their own financial departments to set up risk prevention procedures.

“The letter looks legitimate in every way – even including company stamps – and because of inadequate risk management procedures at the recipient’s end the accounting clerk amends the banking details without verifying the instruction with the actual supplier.

“It is only when the genuine supplier starts to follow up on outstanding payments that the fraud comes to light and it becomes clear that the payments have been made to fraudster crime syndicates who have spotted the weaknesses in existing payment procedures.”

Carver warns businesses that Fidelity Guarantee insurance protection does not cover this kind of loss. “Fidelity Guarantee insurance covers a business against deliberate fraud by their staff and does not apply in this type of highly sophisticated hijacking of payments through forging letters of instruction – the details for which are easily obtained on websites or other sources.”

Carver says businesses of all sizes need to put emergency measures in place with immediate affect. “As specialists in corporate risk management, our urgent appeal to business is to put additional and tight procedures in place where any request to change any banking details, even by a single digit in the account number, is always double checked and verified.

“This needs to be done on the telephone with an individual who is personally known and is in authority at the supplier. Obviously, telephone numbers, email addresses and contact details on the letter of instruction being verified must not be used under any circumstances. In setting up the security procedure it would be smart to have a ‘hot line’ to an authority figure in each supplier, even the owner of the company. This could be a personal cellphone or a direct telephone number which is beyond suspicion for such a verification check. Without this check an account number change should never be made.”