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Protecting Wire Transfers

3/7/2017

If your company uses wire transfers, you've solved some of the headaches involved with paper checks. With wire transfers, you know that a payment arrived and isn't "lost in the mail." You also avoid some of the risks of forgery and other check fraud schemes.

Wire Transfer Fraud Prevention Tips

Review the written policies and procedures established by management for accepting or initiating wire transfers, Automated Clearing House (ACH) activity and bank drafts.

Maintain accurate lists of employees authorized to initiate fund transfers. Have someone other than the person making the request verify all wire transfers. Document the nature and cause of any exceptions.

 

Make sure the wire transfer system not only validates authorized users, but also specifies the transfers they are allowed to make. (For example, a manager might be authorized to wire $1,000, while a CFO might be allowed $100,000).

Record all authorized and unauthorized attempts. Management must scrutinize these records.

Make staff aware of the importance of keeping passwords confidential and secure.

However, wire transfers have their own pitfalls. If you don't have the proper controls in place, there's little to prevent a controller or someone else with wire transfer authority from fraudulently wiring funds from your company to a non-U.S. account. That person may then disappear, leaving you with little ability to monitor his or her actions. And since wire transfers often involve large dollar transactions, this type of crime can be devastating to your company's fiscal well-being.

Remember: Management is responsible for assessing the inherent risks in the wire transfer system you use, establishing procedures and controls to protect the firm against unreasonable exposures and monitoring the effectiveness of such safeguards.

Here are some recommendations to help you avoid becoming the victim of wire transfer fraud:

 

 

 

 

 

 

 

 

Even one incident of wire transfer fraud can cause serious damage to the financial security of your business. Consult a professional to be sure proper controls are in place.

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