For Corporate Fraud Mitigation, Start Well Before the Payment is Made

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If your organization has been in the unfortunate position of being victimized by business email compromise or some other scam that ends with a fraudulent payment -and your money is lost-you know the importance of having a fraud mitigation strategy. And if this never happened to you, a sound strategy can help put the odds in your favor for mitigating fraud. But where do you start?

"The payment is usually not where fraud begins," said Lee Ann Perkins, FCT, MBA, CTP (CD), Assistant Treasurer and Senior Director at Ankura Consulting Group.

"The compromise often happens much earlier in the process, and it starts with an email, a request to change a supplier's information, compromised credentials, or someone impersonating a trusted business partner," said Perkins. And by the time it gets to the payment phase it often "looks completely legitimate and people's defenses are down."

Perkins suggests giving "every person in the payments chain the authority to stop work if something does not look right. You cannot be penalized for taking too long to make a payment because you thought something was incorrect," she said. "Security over immediacy is what we should be teaching our employees."

Also, Perkins cautioned that "fraud prevention cannot sit exclusively within the treasury department or be concentrated at the point of payment. You have to look across the entire life cycle of the payment and make sure your controls are built in there."

Perkins joined Olivia Maciel, AAP, APRP, Nacha Senior Director, ACH Education and Corporate Outreach, on Nacha's Payments SmartCast podcast for a wide-ranging discussion on payments issues of interest to corporates, including the importance of following the Nacha Operating Rules when originating ACH payments. Maciel said "the first piece of advice" she always offers is to get a rulebook.

"It's broken into two sections, the Rules and the Guidelines, and both sections have all you need to know as far as compliance and understanding what is expected of you as an Originator but also as a Receiver of an ACH payment," said Maciel.

Maciel also recommends talking with your financial institution and asking about the types of information reporting they provide, any risk management tools they offer, and the contacts they have should there be an issue with an ACH payment or file. "It's really important to have those contacts at your fingertips," said Maciel.

And if you haven't signed up for Nacha's bi-monthly ACH Corporate Insights newsletter, Maciel said you should.

"Really just a great resource for the corporate practitioner to get an idea of updates, what's expected, and just anything ACH-related."

Much more was discussed, and you can listen to the complete podcast below.