How to Prevent Wire Fraud With Customer Profiling

October 31, 2022

The best way to prevent wire transfer fraud is to separate the action your customer takes to request a wire, and the actual transfer of the money to allow a manual review.

The biggest concern with fraud related to outbound wires comes from the possibility that some wires generated within the system are not coming from a real customer. So what’s the best way to combat this?

What is an effective way to prevent wire fraud?

The best way to prevent wire transfer fraud is to enable a larger scope of control over the wires by separating the action that the customer takes on your platform from the actual act of sending the wire away, and allow the opportunity for customer profile review and manual verification.

For example, if you are profiling your customer and you have a clear understanding of how this customer behaves when it comes to wire transactions. You understand the history, you understand the amounts that they’re sending, you understand the destinations of the wires that they typically send to, and so on, which means you can choose if that wire does not fit this customer’s profiling, and do a manual review to determine if it does.

This is where the separation is important between the actual action that your customer will take (either on your app or on your website, where he will put all the information in, he will put the amount in, he will stand and execute the request to send out the wire), and the actual transfer of the money.

The separation allows for a much more thorough bank wire fraud investigation process, by allowing a moment where you can create an alert that goes directly into a platform like Unit21, where the agent will now have the capability to review the account, do a quick investigation, and then generate an outbound call to the customer to actually verify if they are fully aware of the outgoing wire and the outgoing transaction.

How to Use Unit21 to Identify Wire Fraud

Let’s look at a straightforward example of a rule we might use for detecting wire fraud.

First, we want to craft a rule that looks for any wire transaction that is above a certain value. Ultimately, the value your team sets will be based on what your product does and what would be an abnormally large wire to pass through your platform. There’s no one-size fits all answer to the transaction value itself; it will be dictated by standard behavior of your customers.

Once we’ve established the transaction value to look at, we can further filter the rule to look for transactions to high-risk jurisdictions. When we combine these two variables, it allows us to create a rule that specifically looks for high-value transactions that are going to countries that may be risky to your institution. The resulting alert can also go into its own specific queue for wire fraud, where it has its own unique investigation checklist that tells the investigator exactly what they need to do to confirm whether the wire is legitimate and worth approving.

From there, the analyst has the ability to follow up and clarify information about the case before making a decision. They can create a case, and essentially file the suspicious activity with the treasury. They can also contact the account holder directly, giving them the chance to have the customer verify their identity or verify that they intended to make the transaction in question. Once the investigator has done their due diligence, the investigator will have the option to approve the wire, which allows the wire to be processed and the case to be completed.

Looking for more insights? Check out our second session of Fraud Office Hours on-demand for a deeper dive into current fraud trends and which preventative measures to consider.

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