• 20 Marks

ITF – APR 2023 – L3 – Q7 – Fraudulent Remittance Prevention

Explain in 10 bullet points how to prevent a fraudulent remittance scenario involving a SWIFT MT910 message.

You are in charge of the Foreign Remittances Department of your bank. About a week ago, a certain man came to your office to enquire whether you have received any remittance on his behalf. When asked how much he was expecting he said the amount was USD 23, 745.00 from his brother in America, to which you replied in the negative. He had a few discussion with with you, gave you his name as well as cell phone number and left.

Three days after, you received a SWIFT message MT9 10 (confirmation of credit advice) with an amount of USD 23, 745.00 (from Citbank N.A. so you called him. He gave his account details of your bank’s branch at Somanya. Upon this you gave instruction for payment to be processed into his current account in local currency. Customer withdrew the funds as soon as it hit the account explaining to the branch manager that it was for a building project and had to quickly buy the building material before prices escalate. A week later, you returned from a meeting at Head Office to find a SWIFT message on your desk from Citbank N.A requesting for immediate return of the paid out USD 23.745 received under MT9 10 as it has been confirmed by the FBI as a fraudulent transaction. In fact, Citbank is urgently demanding authorization message from your bank to debit its Nostro account in settlement.

Required:

Explain what you could have done to prevent this from happening to your bank. Your answer should be a ten (10) bullet point format.

[Total Marks 20]

  • Verify the authenticity of the SWIFT MT910 message by confirming with the sending bank (Citibank N.A.) via a authenticated callback or MT999 query before crediting, per BoG’s Cyber and Information Security Directive 2020.
  • Implement a holding period (e.g., 3-5 business days) for incoming remittances matching unsolicited inquiries, allowing time for fraud checks, as practiced post-2017 banking cleanup in Ghana.
  • Conduct enhanced due diligence on the beneficiary, including KYC verification of identity, source of funds, and relationship with sender, aligning with Anti-Money Laundering Act 2020 (Act 1044).
  • Cross-check the remittance details against global watchlists (e.g., OFAC, FBI alerts) using tools like World-Check, especially for US-origin funds, to flag potential fraud.
  • Require documentary evidence from the beneficiary, such as email confirmation from the sender or proof of relationship (e.g., family documents), before processing payout.
  • Use internal fraud detection systems to flag exact amount matches with prior inquiries as suspicious, triggering senior approval per operational risk guidelines.
  • Confirm funds availability in the Nostro account and reconcile with Citibank statements before crediting, preventing premature release.
  • Train staff on red flags like urgent withdrawals for “projects” or matching unsolicited expectations, per BoG’s training mandates in Corporate Governance Directive 2018.
  • Establish a dual-control process for processing remittances over USD 10,000, requiring two officers’ approval to mitigate insider risks.
  • Integrate with BoG’s reporting system for suspicious transactions under the Payment Systems and Services Act 2019, escalating to Financial Intelligence Centre for review before payout.
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