No Rest For The Wicked

In a blog post yesterday, Linda McGlasson at The Agency Insider reminds bankers that Ponzi schemes didn't die when Bernie Madoff went to jail. While Bernie's scam might be the Platonic ideal of a Ponzi, compared to which those of would-be Bernies are mere pale reflections, there are still plenty of crooks milking the same old gullible public with the same basic game plan. And here's the problem that Linda sees:

These criminals are operating mostly under the cover of legitimate-looking businesses that might not be suspected until it's too late.

To shed a little light on this dark world, Linda decided to take a look at some of the more recently uncovered Ponzi schemes. She's trying to give bankers an idea of what they should be watching out for to keep from being used as part of such a scheme. Why? She's glad you asked that question.

Well, unless they're hiding their ill-gotten gains under a giant mattress or in a locked safe at their business, Ponzi schemers are depositing that money somewhere -- perhaps in your institution. Don't forget to consider maybe they're trying to launder their funds through your institution's line of investment services, too. That's something to consider the next time you have a new or even an established business customer throwing a lot of cash around in their accounts in short time periods.

She urges bankers to make certain that their BSA/AML personnel know what to look for in detecting one of those schemes. That's sound advice.

If the crooks stopped at Ponzi schemes, life for bankers would be tough enough. Unfortunately, Ponzis are only one of an array of schemes used by crooks to bilk bank customers. On the same day that Ms. McGlasson's post ran, Softpedia ran an article on an increasingly common criminal scheme employed to hammer banks and their online banking customers, through the use of "electronic money mules" and ACH fraud.

An ACH fraud operation starts with cybercriminals customizing a computer Trojan, which would give them the ability to hijack online banking credentials from an infected computer. Their goal is to infect key people with access to a company or organization's bank accounts and funds with it.

[...]

The trojan can be delivered to the intended target via e-mail or as drive-by download launched from a compromised website.

[...]

The gangs of fraudsters who launch these attacks generally operate from abroad, but since ACH transactions are only nation-wide, they can't get the stolen money directly and need to send it to U.S. bank accounts. This is where intermediaries known as money mules come into the equation. These are people who agree to use their personal account to receive funds and wire them out of the country in exchange for a commission.

Most of the time the "mules" are unwitting dupes who are offered a "work-from-home" job from an apparently legitimate company.

The never-ceasing efforts of increasingly sophisticated foreign and domestic criminal gangs to reach around the globe and pick banks and their customers clean requires that banks remain educated and aware of what's happening, how to recognize it, how to thwart it before it happens, or how to shut it down if does occur. Because criminals often look for smaller community banks to prey upon, where they expect that BSA/AML and security personnel may not be as sophisticated as they are at the larger banks, banks of all sizes and in all locales need to be on their toes.

Unlike during the Great Depression, when bank robbers burst through the front door with Tommy Guns in hand and scooped money out of cash drawers, forced bank managers to open the vault, and otherwise made a lot of noise, during the Great Recession the crooks are coming in through the Internet and looting accounts silently.

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Bankers and service providers interested in learning more about current criminal schemes using online banking may wish to consider listening to an upcoming Bank Law Stuff webinar "Online Banking Security: Corporate Account Takeovers, Electronic Money Mules and How to Protect Your Customers."