Under the current circumstances, there’s undoubtedly been a significant increase in the use of technology. Both from a personal and professional perspective.
These days, fraud is an increasingly common type of crime and financial fraud is becoming more prevalent every year. The Coronavirus pandemic has seen levels increase even further. Here at Ultimate Finance, we have a dedicated Financial Crime team who work closely with government anti-fraud agencies. We do this because, as a responsible lender and as the funding partner of choice, we want to help protect our clients from financial crime.
An important aspect of running a business is ensuring you’re well protected. An area often overlooked can be financial fraud. Recently, our Financial Crime team have become aware of increased levels of mandate fraud taking place, with both businesses and individuals as the intended victims. We wanted to take this opportunity to revisit some guidance on how to recognise this type of fraud.
Today, many fraudsters targeting businesses take advantage of knowledge of existing business relationships to commit Mandate Fraud, a financial crime where businesses are tricked into changing bank transfer mandates by purporting to be an organisation such as a supplier or contractor to whom the business will be making payments.
How can Mandate fraud affect me?
It’s not uncommon in most workplaces these days for contractors to be regularly working on your premises. They can often advertise their services and contact details on their vans or even external signage to let people know work is taking places. Most businesses these days will also receive deliveries from regular suppliers. A fraudster will target a particular victim business by taking note of details such as these and can easily obtain, online, a wide range of information relating to these suppliers and contractors; their domain, contact details, who works there etc. This then allows them to mimic the organisation. Below we look at the various steps that could be involved in a case of mandate fraud:
- Typically, you will receive an email, often followed by a telephone call from the fraudster purporting to be your supplier or contractor. This is often done by mimicking the website and email domains – making the email address appear legitimate. They may even use the supplier or contractor’s logo, taken from their website, to give further credence.
- The email will explain that their account details into which you would ordinarily make payment to them have been changed. They will go on to provide details of a new bank account and ask you to change the payment details to reflect this.
- They may even request for any monies currently outstanding be paid immediately to the new account or they may just wait for future payment.
- You may even ring your supplier or contractor or reply to the email for clarification using the contact details provided in the email.
- If you’re not alert to these risks and fail to conduct proper due diligence corroborative checks, you may fall into the trap of changing the banking mandate as instructed. You may even do as instructed and make immediate payment of any monies owed outstanding as requested.
- Sometime later you are contacted by your legitimate supplier or contractor, querying why the normal payments to them have not yet been received.
- As a result, you might look into this and discover fraud has taken place. You should immediately contact your bank to report this.
- Your bank contacts the receiving bank i.e. the one subject of the fraudulent mandate and tries to claw back the fraudulent funds.
- However, it transpires that once received into the recipient bank, a series of immediate electronic transfers were made to a series of multiple other accounts across different banks for much smaller amounts – some of which are offshore.
Further enquiries reveal the funds have since all been withdrawn and are unrecoverable.
We work closely with our clients supporting the business in the way they require, but also to ensure both parties are vigilant to frauds such as these. Below you can see the guidance we employ to ensure we, our clients and their suppliers aren’t susceptible to this type of fraud.
- Never respond to telephone calls, emails to change banking mandates from any of your suppliers or contractors etc. without conducting further checks.
- Consider, contractors and suppliers rarely change their banking details given the significant amount of additional administration that goes with it e.g. having to contact all their customers to notify.
- Always conduct further checks to verify the request is legitimate, contact the supplier directly using established contact details you have on file – never those contained in the email without checking first.
- When you are having any renovation work done and regular comings and goings of contractors be particularly alert to this.
- Restrict access to those in your company who have authority to change banking mandates and ensure those who do have this authority are properly trained and alert to the risks of mandate fraud.
- Notify your bank immediately if you think you have been a victim of mandate fraud.
When reporting attempted or successful mandate fraud:
Report it to Action Fraud: https://www.actionfraud.police.uk/
Make a note of and include the fraudulent email domains that were used
Make a note of and include the account details where the fraudsters were trying to get them to send them money