In mid-November, the Federal Bureau of Investigations released its 2022 Congressional report on business email compromise (BEC) and real estate wire fraud. According to the report, in 2021, the Internet Crime Complaint Center (IC3) received BEC-related complaints with claimed losses exceeding $2.4 billion, far higher than the $360 million in claimed losses recorded in 2016. In comparison, the second highest dollar loss category reported to the IC3 in 2021 was investment fraud, with losses of approximately $1.45 billion.
In addition, the American Land Title Association expects the annual number of BECs to more than double in the next two years.
For the past several years, the FBI says BEC has consistently been the largest dollar loss by victims’ crime typology reported to the IC3, as “criminals have been refining their exploitation of technology, especially the internet, to carry out financial crimes.” According to a 2022 survey by ALTA, of all the reported wire fraud incidents that occur each year, only 17% of victims successfully recovered all of their funds, but 94% of respondents reported some amount of recovery.
“You have minutes to hours to act once you have knowledge that either your company sent money where it wasn’t supposed to go or you’ve got a buyer out there hanging because they sent $50,000 to a fraudster,” Matt McBride, the vice president of risk management and compliance at Shaddock National Holdings, told attendees at last month’s ALTA One conference. “If it goes to 24 hours, your likelihood of recovery is 15%. If it goes to 48 hours, you are in the 2% range. If it goes to 72 hours, then it is gone. There is nothing anybody can do at that point.”
ALTA said, the FBI report was also spurred on by the trade organization’s efforts of the past two years to get “language included in various House and Senate appropriations reports directing respective agencies to report on efforts to combat and raise awareness of BEC and wire fraud, and collaborate with industry partners to address threats. ALTA is reviewing the report recommendations as part of ongoing advocacy efforts.”
According to a Q3 analysis by FundingShield, 47.9% of transactions had issues leading to wire and title fraud risk at closing and 5% of transactions were not registered or valid in title insurer systems at time of closing.
Presented by: FundingShield
As the FBI looks to counter BEC and wire fraud threats, it says that it is working on providing “comprehensive training to FBI agents, analysts, and support staff focused on BEC schemes and money mules.” In addition, the agency said that it is working to foster “strong relationships with its private sector partners,” and “frequently provides training to financial institutions, the real estate industry, and technology company representatives on current financial crime trends.” To assist in this education goal, the FBI has published a Money Mule Awareness Booklet