What can go wrong? A cybercriminal hacks into the email of an adviser's client and sends an email to the adviser that looks like it is coming from the client. The email asks the adviser to wire a large sum of money to an unfamiliar account for an extraordinary reason i.e. the client is stuck in another country and needs cash immediately. If the adviser proceeds with the transfer, thousands or even millions of dollars could potentially be stolen from the client.
Advisers should also be mindful of red flags, such as a request to wire money to someone or somewhere that the adviser doesn't have on record for the client.
How to fight it: Having proper controls in place surrounding wire transfers can help mitigate the risk of this type of fraud, says Todd Kesterson, director of Kaufman Rossin's family office services group. If an adviser receives a non-recurring wire transfer request, via fax or email, there should be a multi-step verification process, he says. For example, try to verify the request by calling the client, by asking for personal identifying information a PIN number, birth date, Social Security number answers to security questions, or verification by another person that the client has previously designated on the account.