| Friday, October 12th, 2018

Are you protected against money transfer scams?

Small business owners tend to be financially savvy and the last people who would fall for obvious scams, such as phone calls requesting their bank details to recover a large windfall held in an overseas account, or emails from a “friend travelling abroad” who needs money wired urgently to help them in an emergency.

However, the obvious scams aren’t the ones that you should be worried about. Huge sums of money are stolen from hardworking small businesses (and individual consumers) by much subtler forms of fraud. Here’s our FXCompared guide to money transfer scams.


Fraud can be commercially and personally ruinous, which is why fraud protection is so crucial. Small businesses and individuals haven’t the resources to afford the thick layers of fraud protection enjoyed by larger firms. However, there are steps that can be taken:

·         Ensure that all online banking involves not simply one, but two signatories – all money transfers are then sense-checked, substantially lowering the risk of fraudulent transfers.

·         Never underestimate the ubiquitous threat of email phishing and whaling scams. Phishing scams try to obtain your credit card details, bank account numbers and passwords, while whaling scams masquerade as important business emails from a legitimate authority. Staff should always check who an email is really from.

Regulations for reporting Money Transfers

Payment service providers are obliged to adhere to statutory international money transfer reporting requirements. They must record information on the payer and payee involved in money transfers above a certain amount (in the EU, €1,000 or more) to combat the danger of money laundering and other forms of fraud.

Why do money transfers have to be reported?

Reporting money transfer scams is a legal requirement. Any business owner or employee who notices what appears to be a suspicious transaction is required to report this to a nominated officer, who holds responsibility for deciding whether it warrants disclosure to the relevant law enforcement agency (in the UK, this is the National Crime Agency).

What legitimate proof will you be asked for by transfer companies?

The typical proofs asked for by transfer companies for sums above a threshold (e.g., €1,000 or more in the EU) are as follows.

For the payer:

·         Name

·         Full postal address with complete postcode

·         An account number or unique identifier enabling the transaction to be traced back to them

·         Absent a full postal address, the payer’s date of birth, customer identification number and/or national identity number (e.g., passport number)

For the payee:

·         Name

·         Account number or unique identifier, which allows the transactions to be traced back to them

Occasionally, for large sums, additional documents, information or data from reliable and independent sources are required to verify the complete information. These include:

·         Photocard driving licence

·         Passport

·         Documents issued by a government department

What a scam looks like

Example of a personal scam

VR Zone reports that a man selling his car on Craigslist was approached by a buyer who wanted to send the money ($1,800) via money transfer service Venmo. The seller agreed and, as requested, confirmed the payment once it was received as a deposit in his Venmo account. Everything appeared to be proceeding smoothly – until Venmo reversed the payment.

Example of a business scam

An especially virulent and widespread scam affecting businesses is known as the Business Email Compromise (BEC) or Business Email Spoofing (BES) attack. It’s a phishing ruse: fraudsters hack a business officer’s computer and discover the kinds of billing the firm uses, including who the payees are and the commonest balances paid. They then steal a customer’s identity and, via email, bill the firm with wire transfer instructions linked to a fake account.

Scam clues to watch out for:

·         Requests from unknown others to wire money to them

·         Unsolicited approaches, usually via email, promising sizeable rewards for very little effort

·         Requests to individuals selling something online for bank details in order to make a wire transfer

·         Open threats to damage your reputation unless you make “required” payments

·         Bad spelling and poor grammar in a business email – the chances are high that it’s an overseas phishing scam

·         Embedded links in unsolicited emails – hold the mouse over them without clicking to see if they really go where they claim to be going

There are multiple ingenious yet utterly nefarious ways that fraudsters will seek to deprive you of your money using money transfers. We’ve flagged up some of the commonest here, but bear in mind that cyber-criminals are continually evolving their dark arts to circumvent the fraud protection systems that you try to put in place, including your advanced anti-virus software. This protection, however, remains vital: anti-virus software manufacturers employ teams of top engineers to keep several steps ahead of the fraudsters, which is why it is vital to make sure that your subscription is up to date. By doing this, you will also receive regular updates to the software.

We would strongly suggest that if you don’t want to find yourself reporting money transfers because you suspect they’re fraudulent, you should start by familiarising yourself with the tell-tale signs outlined here, and use only truly reputable money transfer companies. You can find out about the best by visiting FXCompared.

FXcompared.com is an fx money comparison site for international money transfer and to compare rates from currency brokers for sending money abroad. The website and the information provided is for informational purposes only and does not constitute an offer, solicitation or advice on any financial service or transaction. None of the information presented is intended to form the basis for any investment decision, and no specific recommendations are intended.  FXC Group Ltd and FX Compared Ltd does not provide any guarantees of any data from third parties listed on this website. FX compared Ltd expressly disclaims any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from (i) any error, omission or inaccuracy in any such information or (ii) any action resulting therefrom.