Companies 'losing millions' in supplier bank fraud

20 June 2011

20 June 2011 | Angeline Albert

Buyers are at risk of losing millions from fraudsters who claim to represent suppliers, according to KPMG.

The accountancy firm last week wrote to its clients about the scam, which involves letters to finance departments “informing” them of a change in banking arrangements. The correspondence requests a supplier’s bank account details be amended, with future payments going to a different bank account. 

Charlie Patrick, director at KPMG’s forensic team, which specialises in fraud investigations, said: “I believe this to be a national issue. I’m aware of certain companies that have lost money – significant amounts of money involving seven figures. The companies paying the money to the fraudsters end up paying twice because they pay the real supplier later, too.”

Firms have been advised to adopt measures to avoid the scam. These include ensuring that correspondence requesting a change in a supplier’s bank details is confirmed with a trusted contact at the supplier. Firms’ suppliers should also be alerted to the potential risk of this scam, including outsourced functions. KPMG warns companies to be wary of providing details of suppliers, clients or business partners to unknown individuals and supplier data should not be provided by telephone unless the person calling can be identified as genuine.

It also advises access to supplier data should also be restricted to those who require the information to perform their duties. Businesses must also consider whether the location of the bank seems appropriate where future payments are to be made.

Julie Bruce, senior manager within the KPMG forensic team, said: “Often, many businesses who have amended a supplier’s details do not realise there is a problem until they are chased for payment by that supplier.  A number of well known organisations have been tricked in this way.”

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