Fed urged to improve wire fraud prevention policies
Wednesday, July 11, 2018
A Republican congressman is urging the Federal Reserve Board to step up its game when it comes to preventing wire fraud, including considering mandating financial institutions adopt payee matching.
Payee matching is an extra step which financial institutions take to ensure that the name of a payee on a payment transfer accurately matches the payee name on the account which is receiving funds from the institution.
In a June 29 letter to Fed Chairman Jerome Powell, U.S. Rep. Randy Hultgren (R-Ill.) urged the Fed to be more proactive when it comes to wire fraud and real estate transactions.
“I have concerns that current Federal Reserve policies on wire fraud may not be adequate. Evidence suggests that the Federal Reserve should consider taking a more proactive role in preventing wire fraud, especially as it relates to real estate transactions,” Hultgren wrote. “For example, the United Kingdom’s payment systems regulator has identified payee matching as a possible solution to address the growing issue of wire fraud in their jurisdiction.”
Hultgren referenced the November 2017 testimony of former ALTA President Daniel Mennenoh before the House Committee on Financial Services. Mennenoh quoted FBI statistics reporting a 480 percent increase in wire fraud attempts to steal closing funds, with an average wire fraud loss of $129,427.
“Clearly, a financial loss of this magnitude would amount to a financial disaster for most families, particularly for first-time homebuyers,” Hultgren wrote.
Hultgren urged the Fed to encourage financial institutions to match both the account number of the beneficiary and the payee’s name when initiating a wire transfer. Payee matching is not mandatory.
Hultgren asked the Fed to respond to several questions by July 18. Those questions are:
What awareness do you have about wire fraud as it relates to real estate transactions? Do you believe the issue is growing?
How is the Federal Reserve addressing the issue of wire fraud?
Has the Federal Reserve considered requiring financial institutions to apply payee matching when initiating a wire transfer?
Does the Federal Reserve have the requisite statutory authority to address wire fraud issues?
Has the Federal Reserve determined if the current wire transfer systems technology will allow for payee verification? If not, why was payee verification not included in the Federal Reserve’s evaluation of the future of the payments systems?
Original article found at: https://www.thetitlereport.com/Articles/Fed-urged-to-improve-wire-fraud-prevention-policie-73612.aspx