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Warning for Business Email Compromise and Other Types of Financial Frauds

The FBI is reminding organizations of the severe threats posed by BEC scams, declaring it causes over $1.8 billion worth of losses to businesses each year.

BEC or ‘business email compromise’ and related fraud continues to increase at an alarming rate. Although BEC fraud losses are severe, it is often an indicator of other underlying severe issues for the business. Insurers deny many insurance claims related to BEC fraud. Moreover, ensuring the appropriate submission of any claim, reports to law enforcement, regulators and other stakeholders must be carefully considered.

The successful investigation of any BEC fraud is time-sensitive. It requires independent cybersecurity and fraud professionals collaborating to gain an understanding of how the BEC fraud occurred. They must collect forensic evidence, assess financial losses and other damages, deliver expert reports backed by unbiased forensic evidence, assist in appropriate remediation services, and perhaps most importantly, ensure that our clients’ interests are well-protected.

How BEC and Related Financial Fraud Occurs

Step I: Organized Crime groups probe and target businesses and 3rd Parties with which they conduct business, often through spear-phishing or other hacking mechanisms.

Step 2: Vulnerabilities at the victim company and their 3rd party are exploited

Step 3: Exploitation of Resources: Victim companies are socially engineered via persuasion and pressure to exploit human nature. Victim company systems and data may also be compromised and manipulated, including creating backdoors into critical financial and business systems. 


Step 4: Wire transfer:  Upon transfer, the funds are steered to a bank account controlled by the organized crime group, violating 18 US Code § 1343 Fraud by wire. 

Did you know that even if the government recovers the victim’s stolen funds, BEC and related fraud victims may not receive restitution if the government deems the victim’s business negligent or reckless? Contact Withum today to help ensure your business’ assets and interests are protected.

At Withum, our forensic accounting expertise, combined with digital forensics and cyber response solutions, can help prevent another BEC fraud from occurring again. 

Our cybersecurity and forensic accounting consultants with expertise in all facets of forensics can assist in BEC fraud cases as follows:

  • Provide independent assurances that the business’ assets are protected, vulnerabilities are identified and addressed, and leakage is stopped
  • Conduct rapid cyber due diligence, identify gaps, and remediate vulnerabilities and backdoors.
  • Identify broken business and financial processes and align with acceptable industry, regulatory and accounting standards
  • Assist in the forensic evidence collection to support expert-written reports, regulatory requirements, damage assessments, and claims submission
  • Review pertinent materials (e.g., emails, controls, etc.) to gain an understanding of how the fraud occurred for executive reporting and expert reports backed by unbiased evidence of findings
  • Interview individuals who knew how the BEC fraud occurred as well as gain an understanding of the accounting/financial controls in place at the time of the fraud occurrence
  • Review internal financial/accounting policies and procedures to determine whether they were followed
  • Determine whether the company has an effective incident response plan and whether they followed it
  • Identify any deficiency in financial/accounting, IT and security controls that enabled the BEC fraud to happen
  • Report to the Board of Directors and/or Audit Committee our findings in the investigation and recommendations going forward
  • Preparation of our report detailing our findings to be used by Counsel and/or for insurance purposes
  • Provide expert testimony in civil and/or criminal matters

How Susceptible is Your Business to BEC Fraud? 

Confirm whether your IT or Managed Service Provider (MSP) is secure. Are your third-party vendors with whom you do business secure? Plan on acquiring, selling, or merging with a company?

Find out how susceptible your business is to BEC/Cyber Fraud – reach out to us to get your confidential Withum BEC/Cyber Fraud Scan Risk Report today. If your business is a victim of BEC/Cyber Fraud, get immediate support now by calling (800) 470 0988.

Cyber and Information Security Services

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