Saturday, June 18, 2011

Fraud Alert

By Michael Scheibach, Executive Editor

Financial fraud has never been more serious — and costly — for American businesses. According to the “2011 Business Banking Trust Study,” just released by Guardian Analytics, 56 percent of businesses responding to the survey experienced fraud in the last 12 months. Of these, 75 percent were victims of corporate account takeover or online fraud. The FBI estimates that corporate account takeover, in which fraudsters redirect ACH money transfers for legitimate business payments to their illicit accounts, could cost companies $1 billion this year alone.

“The level of ACH risk for a financial institution continues to rise as fraudsters become increasingly sophisticated,” said Barry Rich, chief financial officer and enterprise risk management group head at CapitalMark Bank & Trust, a 4-year-old de novo bank in Chattanooga, Tenn. “These criminals are beginning to target community banks in the belief they are more susceptible to attack.”

Banks are the front-line defense against financial fraud, which is increasingly challenging as payment channels expand, thus offering more avenues for fraudulent activity.

“Customers rely on anytime, anywhere access to payment information that can be easily integrated into their workflows and allows them to be more efficient,” said Uma Wilson, vice president, product management and development at UMB Bank in Kansas City. “As companies continue to operate daily in an open and highly networked online environment, safeguarding this information requires a delicate balancing act to provide ease of use and security.”

Connie Livingston, vice president, treasury management product manager, at Regions Bank, headquartered in Birmingham, Ala., also emphasizes the critical role for banks.

“Protecting the security of information is something Regions takes very seriously, and we are committed to providing advanced solutions to mitigate our clients’ exposure to fraud,” she said. “We have multiple systems in place that are client-facing with multi-factor authentication as well as internal to ensure the security of information. We also believe that client education of best practices is a critical component of preventing corporate account takeover.”

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