IMB Assistant Director Michael Howlett stated: “This particular scam typically pursues amounts of money small enough to fall just below the threshold that triggers routine checks. Because the amounts are smaller, banks do not perform the necessary checks and are unlikely to spot these frauds.”
While fraud involving small amounts may not seem like a large problem, totals can add up quickly. The case of convicted fraudster Glenn McCorquodale is a telling example. As reported in a 2003 edition of the ICC newsletter Commercial Crime International, McCorquodale was able to amass several million dollars by perpetrating numerous low value fraud operations with non-existent agricultural or metal shipments. McCorquodale ultimately received a four and a half year jail term. The frauds he conducted are very similar to those many banks may be currently facing.
IMB investigators were recently called upon to investigate a metal shipment after a bank encountered documents that did not appear authentic. The amount of money involved would ordinarily see the consignee paid without question, but something about the documentation led the bank to question their validity.
Examining the bill of lading, IMB quickly established that the vessel named on the bill did not exist. They also found that while the noted container numbers were genuine, their prefixes belonged to containers owned by another company. The company name and address used had been employed in a series of earlier frauds. Lastly, the commodity said to be shipped − metal from the UK at slightly below market value − had also been used in a number of recent frauds.
Mr Howlett commented: “The fraudsters operating these kinds of frauds are counting on banks not to make the necessary checks. In this specific case, the fraudster was only seeking £193,000 assuming the bank would not investigate important elements of the documentation. With IMB assistance, the bank was able to identify and prevent this fraud.”
The IMB is concerned that banks may be facing a series of such commodity frauds and the organization is urging financial institutions to exercise caution if they are asked to confirm financial documentation for non-customers. Banks concerned about documentation related to commodities fraud or those that have recently encountered similar suspicious activity are advised to contact the IMB for assistance.