Financial Scam within the Financial Services Industry

We have received the following email from our professional body which will be of interest.

“The Financial Services Industry continues to evolve following the demands placed on us by our customers and Independent Financial Advisers. Financial Crime and in particular, fraudulent schemes also continue to evolve at an alarming rate.

Over the past few months, UK and Europe Financial Crime teams have been assisting a number of Independent Financial Adviser firms and their clients as a result of them becoming victims of fraud. Serious and organised gangs are using a new ‘modus operandi’ and during the past weeks another four IFA firms and a number of their respective clients have been targeted.

On every occasion, customers email accounts have been hacked. Once hacked, the ‘criminals’ identify those financial services firms with whom the customer has a relationship with and then attempts to encash their victims products. 

Communication between the fraudster and the IFA is always done via email and originates from the customers genuine email account. Instructions to change bank account details are then submitted to the IFA (sometimes including a copy false bank statement) who in turn, pass the instruction to the provider. Once the details have been updated the fraudster subsequently instructs the IFA to encash or withdraw funds from the product being targeted and have the proceeds credited to the new bank account. Once the funds have been deposited, the money is immediately withdrawn and very difficult to recover.

In respect of the cases identified to date, there are a number similarities in that;

  • The language used by the fraudsters is broken English and the emails contain a number of basic grammar and spelling mistakes;
  • Requests to encash or withdraw money is always urgent and the instruction asks for the money to be transferred via Telegraphic Transfer or CHAPS.

The purpose of this communication is to raise awareness to all staff. We all have a responsibility to protect our customers assets and assist financial advisers anyway we can by ensuring any requests received are indeed genuine.

Should IFA’s receive such suspicious requests via email, then I would recommend they pick up the phone and clarify and confirm the instructions they have received with the customer verbally.”

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

Although the scam should be easily identifiable, this nevertheless reinforces the need to be diligent, have robust systems and controls in place as well as clear communication channels with clients

Action Required By You

Advise all staff of the fraud, be diligent and ensure withdrawal requests from customers are genuine and validated

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About the Author

Steve is an ATEB Director and has a deep understanding of all matter regulatory, built up over his 30 years + in the industry. With a training background and a technical brain, he overseas numerous complex projects and client implementation work.

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