Law Enforcement Cracks Down On Corporate Payments Fraud

Payments messaging technology provider SWIFT recently opened up its Know Your Customer (KYC) platform, the KYC Registry, directly to corporates. The initiative enables 2,000 corporate groups on the SWIFT network to utilize the KYC Registry by uploading and maintaining their KYC data with financial institutions.

“Corporate treasurers cite KYC as one of the top-three challenges they face in their bank relationships,” said SWIFT’s Head of KYC Compliance Services Marie-Charlotte Henseval in a statement, adding that the network “already delivers huge benefits to banks, and its extension to corporates will extend them the same advantages, with a standard agreed [upon] by the community and a secure platform enabling efficient data sharing.”

As a regulatory initiative aimed at combatting financial crime, KYC requirements are growing ever-more complex, leading corporates and their banks to demand new technologies and services that can address their compliance challenges. SWIFT’s decision to open up the registry also reflects the growing threat of fraud in corporate payments.

Below, PYMNTS explores the latest cases of business payments and financial fraud bogging down businesses large and small this holiday season.

More than seven years of manual employee time-tracking has led to allegations of payroll fraud and abuse at the Albany County Comptroller in New York, according to local CBS news reports. Manual, paper timecard entries have allegedly enabled some county employees to submit their hours weeks in advance. While law enforcement officials are now probing the matter, County Executive Dan McCoy denies any accusations of payroll fraud or abuse.

Twenty-one procurement service organizations have been targeted by fraudsters, according to a new report from security firm Anomali and its Threat Research team. The analysis found that these spoofed organizations are popping up in the form of fake websites of government procurement service providers in the U.S., Canada, Mexico, Sweden, Australia and South Africa. Emails from these fake websites include fraudulent invoices to suppliers, with bid proposals enticing these companies to provide their website login credentials, enabling fraudsters to use those credentials to infiltrate those suppliers’ operations and steal funds, reports said.

About $2 million in fraudulent invoices were reportedly sent to the U.S. Postal Service, according to an indictment by a federal grand jury in Maryland. Reports in the Carroll County Times said that the U.S. Attorney’s Office for Maryland announced charges against an individual, accusing him of using his repair and maintenance company to submit false invoices to the post office for work never performed.

The Federal Trade Commission (FTC) refunded $2.6 million to defrauded small businesses (SMBs), the body announced earlier this week. The refunds followed an ongoing scam operated by a New York-based company called A-1 Janitorial, which the FTC sued in 2017 over allegations that the company promised free cleaning products for SMBs, only to bill those small businesses for the full amount. According to the FTC, the scam involved A-1 Janitorial submitting an invoice that included the name of a professional within the targeted small business, misleading that SMB to believe that those products had been formally ordered. The FTC said the company would send more than 30,000 checks — each averaging $86 — to the SMB scam victims.

A $29.9 million fine was issued by the U.K.’s Serious Fraud Office (SFO) against Serco for allegations of accounting fraud, The Guardian reported this week. The SFO followed the fines with charges against two former employees of the public services outsourcing company. One of the charged individuals has denied any wrongdoing, reports said.