Customer-Initiated Wire Transfer Fraud
Question: I have heard that customer-initiated wire transfer fraud – via voice, fax, email and online – is on the rise. What can I do to minimize our potential loss exposure?

Answer: It all starts with having strong internal policies, procedures and compliance procedures. Your Financial Institution Bond (FI Bond) will only provide coverage if you follow the procedures outlined in your FI Bond Policy, which typically include the following:

  1. A wire transfer agreement on file for that customer.
  2. Verification of transfer request to agreement – name, callback number, PIN, passwords, etc.
  3. Adherence to any procedure required by the policy. Typically a recorded callback will be required, preferably not by the employee who received the request.
A common claim scenario would be for a perpetrator to compromise the bank customer’s phone system and/or passwords resulting in fraud, despite the bank staff following all required procedures.

On the other hand, we have seen claims denied because there was no customer wire transfer agreement on file and because the callback was made to the perpetrator’s number rather than the number on the wire transfer agreement. Coverage limits should coordinate with the maximum allowed transfer amount, but in most cases can be no higher than the Basic Bond limit. The callback threshold should coordinate with the FI Bond deductible or a lesser amount if desired.

Spend some time with your FI Bond agent to make sure you understand your carrier’s requirements and to make sure your limits are adequate.
If you are interested in finding out more about MBIS or the products available please contact Jeff Otteson at 608-217-5219 / or Adam Dawson at 952-857-2604 /