5 pro tips for finance leaders to combat fraud

1. Be wary of fraud in high-risk sectors: learn from the shipping container scam

Between February and April 2023, there was a notable surge in fraudulent activities within the shipping container sector, particularly targeting educational institutions. Eftsure detected four cases of fraud that might have otherwise gone unnoticed. Finance leaders in industries dealing with high-value goods or large transactions should enhance their verification processes and ensure thorough vetting of all vendor details before approving payments.

Pro tip: Implement a payment verification solution like Eftsure to detect unusual patterns and verify supplier details, especially for high-risk transactions. Regularly train your team on the importance of following verification protocols, even under time pressure.

2. Combat internal fraud: the hidden threat

Internal fraud is an increasing concern, as demonstrated by two recent cases where internal actors attempted to bypass verification procedures to authorise payments. Eftsure’s system successfully exposed these attempts, underscoring the importance of robust verification processes as both a detection tool and deterrent.

Pro tip: Strengthen internal controls by enforcing mandatory verification processes for all payments. Regularly audit and monitor staff with access to financial systems, and ensure employees understand that verification processes are non-negotiable safeguards.

3. Email compromise: a growing risk for finance teams

From May to July 2023, five cases of fraud were linked to compromised emails from both finance teams and their suppliers. Fraudsters are increasingly targeting both ends of transactions, making fraud detection more complex. A staggering 90% of frauds involved compromised or impersonated emails of finance leaders, such as CFOs and Accounts Payable managers.

Pro tip: Implement advanced email security measures and require employees to use multi-factor authentication (MFA). Regularly update cybersecurity protocols and educate your team about sophisticated phishing schemes that target both internal and external communications.

4. Monitor unusual supplier requests: a common scam tactic

One in two fraud cases involved fraudsters claiming they were closing bank accounts for “auditing purposes”, attempting to redirect payments to fraudulent accounts. Such excuses should be treated as a potential red flag.

Pro tip: Always verify bank account changes directly with the supplier via a known contact, never through the email or phone number provided in the change request. Implement tools like Eftsure that provide an additional layer of verification for bank account changes.

5. Protect against identity theft: the role of blacklists

Eftsure detected two instances of identity theft fraud, showcasing the value of exclusive blacklists. These lists provide finance teams with critical information not typically available, aiding in the identification of fraudulent actors.

Pro tip: Leverage blacklists to screen new suppliers and identify potential risks early. Regularly update and expand these lists to stay ahead of evolving threats.

2023 fraud trends and key insights

• Internal fraud: One in five frauds involved insiders within supplier organisations.
• Diverse fraud amounts: Fraud incidents ranged from $478 to over $1,000,000, highlighting that no transaction size is immune.
• Financial impact: Eftsure’s fraud detection capabilities directly saved customers approximately $50 million across the year.
• Targeted industries: The construction industry saw the highest fraud rates, followed by frequent incidents in organisations using HSBC, NAB, and WBC bank accounts.