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Take measures to prevent CEO fraud

In CEO fraud, criminals impersonate a highly placed manager or executive from your organisation (e.g. CEO, CFO, Group Executive or director) in order to steal money from you. This type of fraud generally involves very large sums of money. It is, moreover, a financial loss for which your organisation is not insured. That is why it is essential that everyone in your company is aware of this form of fraud and knows how to prevent it.

Voorkom CEO fraude, neem maatregelen
 

How does CEO fraud work?

The fraudster contacts a manager, a member of the accounts department or any other employee that could be of value to them, either by telephone or by email, and asks the employee to make an urgent, confidential payment. This payment is typically made to a beneficiary abroad, making it harder to trace the payment. In many cases, fraudsters even mention a non-existent third party that can be contacted to ensure the payment is correct. This fraudulent or non-existent third party may be presented as a ‘law firm’ that the employee can call to confirm the payment.

The payment is, of course, carried out at the instruction of the fraudster, not the company. As the payment is sent by an authorised employee from your organisation, this type of fraud is difficult to intercept. Moreover, banks and insurers do not provide any compensation for the amount stolen.

Fraudsters sometimes spend months on preparations. They obtain information by purchasing data on illegal black markets, or by visiting your company’s website or the LinkedIn pages of your employees, or simply by asking questions by email or by telephone. Another approach that criminals take is to hack the company’s email so that they know exactly who to approach and which persons normally give instructions to make payments.

 

How can CEO fraud be spotted?


  • This type of fraud often starts with a spoof email, supposedly sent in the name of a key manager or executive at your company, such as the CEO or CFO. The fraudster often follows this up with a telephone call to put pressure on the targeted employee.

  • Criminals often use uncertainty or fear to persuade employees: they act as if the transaction is ‘highly confidential’, such as a major purchase or an acquisition that demands ‘strict secrecy’. 

  • In virtually every case, the payment instruction involves a departure from the normal rules in force at your company. 

  • The name and account of the beneficiary are usually unfamiliar and have not been used previously within your company.
 

How can CEO fraud be combated?

  • Ensure that everyone throughout your organisation is aware of this type of fraud, and especially those employees working in departments where payment instructions are processed. The larger an organisation is, the greater the risk, because employees do not always know each other personally and are not always in direct contact with senior managers.
  • Ensure that fraud is a topic that can be discussed openly within your company and give your employees specific tips for preventing fraud. If your employees feel able to express doubts, attempts at fraud are less likely to succeed.
  • Ensure that fraud, and fraud prevention, are items on your board’s agenda, in the same way as other operational risks (e.g. fire).  

  • Ensure there are clear rules governing payments and that these are recorded:  

  1. Set rules governing which persons are able to initiate a payment instruction if an approved invoice is not available. Fraudsters use departures and special situations to trick employees into circumventing the rules.
  2. Ensure that more than one signature is always required to approve a payment instruction (segregation of duties or double authorisation). Two people performing checks always see more than one person acting alone, and it is much harder for fraudsters to trick two employees than one. Authorisation rules can be configured easily in both Internet Banking and Access Online. If you require assistance, please contact Client Services (in Dutch). 
  3. Always try to avoid exceptions to the payment procedures. If a payment instruction requires a departure from the rules, always carry out a double check, for example by verifying it with another colleague with decision-making authority for payments, or with a manager. If you receive an email containing a request that involves a departure from the rules, contact your CEO or CFO using a different means of communication (e.g. telephone). By performing an additional check, you can be certain that the instruction comes from your CEO or CFO. Fraudsters like to take advantage of the size of the organisation and the fact that this may mean you do not know the CEO or CFO personally. 
  4. Always carefully check the email address whenever a payment instruction is received. In some cases, a spoof email address contains only one character that differs from the original.
  • If you have any doubts, always consult a colleague or your manager.

 

Questions?

If you have any questions about this type of fraud, contact your relationship manager or Client Services (in Dutch).