Banking Fraud in the International Banking Sector

15 January, 2025

Synopsis

• Overseas financial fraud may include identity theft, cyber-attacks and authorised push payment (APP) scams.
• For overseas investments, you must ensure you invest via reputable and authorised entities.
• Use multi-factor authentication, monitor account activities and improve cybersecurity practices to reduce the risk of fraud.
  
  

The international banking sector plays a key role in the global economy. It connects businesses, governments and individuals across borders, enabling trade, investment and the flow of capital. Frauds at an international level can cause significant financial losses, disrupt trust and damage economies. Keep reading on to know more about international banking scams.

Common Types of International Banking Scams

The following are some of the scams associated with international banking:

• Identity Theft and Account Takeover

Cybercriminals often target international customers for identity theft. Through data breaches, phishing or social engineering, they steal personal information to access and control your accounts. Once they have access, fraudsters may change your account details or perform transactions without your knowledge.

• Cyber-Attacks

Advanced cyber-attacks, such as malware, ransomware or Distributed Denial of Service (DDoS) attacks, pose serious risks to international banking customers, especially businesses. Hackers can exploit security vulnerabilities to infiltrate systems and steal sensitive data. For international businesses, these attacks can be devastating, impacting not only finances but also operations and reputation.

• Card-Not-Present Fraud

Card-not-present fraud is a growing threat in international transactions, especially for those shopping or making business purchases online. In this scam, fraudsters use stolen card information to make purchases without physical access to the card. With international transactions, tracking and reversing these unauthorised charges may become challenging.

• Authorised Push Payment (APP) Scams

APP scams involve fraudsters impersonating legitimate businesses or authorities, urging you to transfer funds to an overseas account under the pretence of an urgent or official purpose. This tactic is especially effective with cross-border payments, where the victim believes the funds are going to a reputable source. This makes it difficult to recover funds once sent.

• Phishing Attacks

Phishing scams target you through deceptive emails, SMS or phone calls, often mimicking your bank or a trusted institution. They aim to collect sensitive information like account numbers and passwords. This is especially common in cross-border scams, where fraudsters pose as international banking authorities.

• Money Mules

Money mules are often recruited to help transfer illegally obtained funds across borders. In some cases, unsuspecting individuals are targeted with job offers or investment schemes, only to realise they are acting as intermediaries for illicit transactions.

• Investment and Offshore Banking Frauds

Offshore investments or high-return schemes can sometimes be elaborate frauds that promise lucrative gains. Scammers may target investors looking to diversify internationally by setting up fake websites and credentials to appear credible.

• Business Email Compromise (BEC)

BEC scams are a common form of international fraud, especially among businesses handling global payments. Attackers impersonate company executives or trusted partners, requesting fund transfers to overseas accounts under the guise of official business, exploiting the gap in international communication and time zones.

How Individuals & Businesses Can Protect Themselves From International Scams

Here’s how individuals and businesses can protect themselves from international banking fraud:

• Secure Your Accounts with Multi-Factor Authentication (MFA)

MFA adds an extra layer of security beyond just a password. By requiring multiple forms of verification, such as a code sent to your phone or biometric recognition, MFA makes it much harder for fraudsters to gain access to accounts even if they have your password.

• Monitor Transactions Regularly

Review your account activity frequently. Set up alerts for large transactions or foreign transactions so you’ll be notified immediately if there’s any unusual activity. Businesses can use automated transaction monitoring software to catch irregular patterns.

• Strengthen Cybersecurity Practices

Implement strong cybersecurity measures, like using updated antivirus software, secure firewalls and regularly updating software and systems. This is essential for businesses that rely on digital transactions or handle sensitive customer information.

• Be Wary of Phishing Scams

Phishing emails and texts are common tactics used by fraudsters to gain access to sensitive information. Avoid clicking on links or downloading attachments from unknown or suspicious sources. Verify all communications that seem unusual by contacting your bank directly.

• Verify International Transfer Details

For both businesses and individuals, it’s crucial to double-check overseas fund transfer information before sending funds, especially if a request seems urgent or comes from overseas. Scammers often use pressure tactics to bypass verification. Call the requesting party to confirm details using a known contact number.

• Limit Account Access and Authorisations

For businesses, it’s wise to control who has access to financial accounts and limit authorisation for large transactions. As a business owner, you can segment access among employees and potentially reduce the risk of internal fraud.

• Educate Employees and Stay Informed

Regularly train employees about cybersecurity threats, especially common international banking scams like Business Email Compromise (BEC) or Authorised Push Payment (APP) scams. Individuals should also stay informed on the latest fraud tactics and preventative measures.

• Use Trusted VPNs for Online Banking

When accessing your accounts abroad, use a reputable Virtual Private Network (VPN) to secure your internet connection. A VPN encrypts your online activity, making it harder for fraudsters to intercept your information, especially over public Wi-Fi.

• Work with Trusted Financial Partners

Make sure that if you want to invest internationally, you do so via regulated and reputable financial institutions. Reputable banks will have clear security protocols and transparent communication.

Stay Vigilant Against International Banking Fraud

Whether you’re a retail customer or a business owner, remember that vigilance and proactive security measures are your best defence against global banking fraud.

Join Vigil Army, where Vigil Aunty will decode various frauds and give people a heads-up on the dos and don’ts of combating frauds online. To join the Vigil Army, send ‘Hi’ to her via WhatsApp number: 7290030000.

*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.