Fraud Identification Training Sept-Oct 2022

CASE STUDY 12

WIRE TRANSFER ACTIVITY

Situation :

Bank of the Plains (BOP) is a $65 million bank located in the Midwest. An employee of one of the bank’s commercial customers telephoned BOP to request a $9,300 wire transfer from the company’s account to Second National Bank (SNB). The payment instructions given to the cashier by the employee stated SNB should pay the funds on demand to the specified beneficiary upon showing proper identification. BOP promptly sent the funds and payment instructions via Fedwire to SNB. Because it was the first of the month, BOP was very busy and the cashier failed to review the wire transfer agreement between the commercial customer and BOP, to verify the persons authorized to transfer funds from the company’s account. BOP does not perform any call back procedures to verify the legitimacy of the wire transfer. Past regulatory reports have been critical of the bank’s lax internal controls and procedures in this area. The same day, the beneficiary of the wire arrived at SNB and requested the funds. Due to the lack of proper identification, SNB refused to make the payment. The beneficiary promised to return with the proper identification. Upon her return with adequate identification, SNB advanced the wire proceeds. Later in the same day, the company employee who had made the original phone call called BOP once again. The employee requested another funds transfer from the company’s account, in the amount of $7,800. BOP accepted the request and began the transfer process again.

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