Payment fraud and cybercrime were the hot topics of the October 23-26 2022 AFP Conference in Philadelphia.
The Association for Financial Professionals (AFP) brought together thousands of finance professionals to exchange on industry best practices. We had the opportunity to attend the major talks around fraud and decided to share our main takeaways.
Payment Fraud: Key Data
According to the 2022 AFP Payments Fraud and Control Report, 71% of organisations were exposed to payment fraud in 2021. And when Tammy Jo Bianchi (Director of Cash Management for the Commonwealth of Pennsylvania) and Kim Sipes (Director of Treasury at Duke Energy) asked the AFP attendees: “in the last two years, has your organisation been targeted by payment fraud?” 95% of the room said yes! Among those, 68% of organisations were targeted by Business Email Compromise fraud, 35% of them experienced a financial loss totaling $6.6B in 2021 reported losses.
Payment Fraud: What? Who? How?
Chris Buyers, Sr. Product Manager at PNC, shared an edifying example of what a payment fraud can look like. Chris told the true story of a client, in which a criminal impersonated the CEO of a European aeronautical company to request a €42 million wire payment for an “acquisition project”. Before they realized it was a scam, the company executed the wire transfer and lost those €42 million. What happened next? Both the CEO and CFO of the company were fired.
Unfortunately, this is not an isolated case. It can involve many different stakeholders within an organization, with the most likely targets being the Accounts Payable and the Treasury departments.
“Fraudsters are using social media, Linkedin.. they are able to map your entire organization, they are sending notes to the people in Treasury, they try to get you to give them passwords. When your email or password is compromised, they can get into your bank account.” said Frank d’Amadeo, Director of Treasury Operations at Con Edison.
Indeed, fraudsters try to appear as trustworthy and legitimate as possible. Linkedin can be a great source of data for them, but they will also analyze your email signature and imitate the font, among other techniques. “They even knew my favorite color!” added Kathy Mertes, Vice President of Digital Payments Strategy and Solution at Conduent.
How to Prevent Payment Fraud Within Your Company?
According to Lynn Cirrincione, Director of Cash & Banking Operations at Allstate:“Every single person in the organization must know what the fraud schemes are.”
It is important to empower your employees to question suspicious emails or payment requests. However, educating is not enough and fraud can come from anywhere, at any time. Frank D’Amadeo testified: “Recently, we lost $80,000 in one of our subsidiaries. The supplier they were dealing with got hacked. They failed in identifying a change in payment instructions.”
Bank account validation requires manual cross-checking of multiple data sources, resulting in a high risk of error. “We have to be diligent to make sure we know our payees” said Kathy Merthes.
So what is the key to being best-in-class in fraud prevention? Controlling the accuracy of all your supplier data, all along your Procure-to-Pay process.
Companies need to automate these controls to continuously monitor supplier data.
Eliminating the risk of fraud within your organization is really about regaining control over your supplier data from the moment you integrate it in your system, until the payment is executed.
There would be much more focus on value and revenue growth if finance departments had more peace of mind.
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