Payment Diversion Fraud

Our Head of Charities, Jenny Simpson, looks at the most common fraud attempted against her clients;

Part of our role as auditors is to consider the systems and processes that our clients have put in place to mitigate the risk of fraud.  We also must enquire about actual, alleged and attempted fraud and evaluate fraud risk and its impact on our planned audit approach.

Over the past couple of years, clients have been reporting attempts of payment diversion fraud with worryingly increasing frequency.

Payment diversion fraud is a type of impersonation fraud and is also known as business email compromise or mandate fraud.

It occurs when the fraudster contacts you (by email but also sometimes by phone or even a physical letter) purporting to represent a company from whom you buy goods or services.

Usually, they say that they have changed their banking arrangements and request that you update your records to reflect the new bank account and payment details. If you are conned in this manner, it’s likely that you’ll only find out about it when your supplier chases for payment.

How can you avoid payment diversion fraud?

The most robust control you can implement is to ensure that requests to amend payment details are verified independently.

When such a request is received, contact the supplier using a telephone number you know to be correct (not the one in the email or letter sent by the fraudster!) and seek confirmation of the validity of the change.

Controls over security of emails and strength of passwords are also important to mitigate the risks.

Unfortunately, fraudsters are both clever and unscrupulous, so charities need to regularly review and update their processes and controls to stay one step ahead and ensure that the charity’s assets are protected.

This blog is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not be used as a substitute for taking professional advice in any specific situation. Wbg Services LLP (and its subsidiary Wbg (Audit) Limited) will accept no responsibility for any actions taken or not taken on the basis of this blog. If you would like further advice or would like to discuss any of the issues raised in the blog then please get in touch with your regular Wbg contact or use the contact form on our website

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