‘Time is of the Essence,’ Law Enforcement Officials Say About Fighting Fraud
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WASHINGTON–As the mortgage banking industry becomes increasingly digitized, the potential for cybersecurity crime or fraud remains high. But law enforcement officials speaking at the Mortgage Bankers Association Compliance and Risk Management Conference said steps such as building relationships and being diligent and timely in reporting can help combat it.
Speaking at a session titled “Fraud Trends From Law Enforcement” on Sept. 11, Stavros Nikolakakos, Supervisory Special Agent, Criminal Investigations, for the U.S. Secret Service, urged those in the industry working in loss prevention to form good contacts with law enforcement who they can quickly reach out to if they spot fraud.
“Time is of the essence,” Nikolakakos said. “The big takeaway is you have to have a relationship with law enforcement.”
In terms of timeliness in reporting, Nicholas Berta, Supervisory Special Agent, Financial Crimes Section, Economic Crimes Unit, Federal Bureau of Investigation, discussed the FBI’s Internet Crime Complaint Center, or IC3.
He described a scenario in which an individual realizes funds are lost and they’re a victim of a scam.
“This is for everyone in this room, and also clients, bankers, family members, get that information to IC3 as soon as you can. Call the bank first, then get that information to IC3,” Berta said. “If it’s reported quick enough, and it’s domestic, with money going to the states, there’s a chance to get your money back.”
In addition to the IC3 reporting mechanism, the panelists discussed Suspicious Activity Reports, more typically filed by financial institutions to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
“For those of you that are in a compliance department doing their SARS, [you] are strongly encouraged, don’t hold back. Put your conclusion and dollar amount near the top within the first paragraph of the SAR,” Nikolakakos said. “So do yourself a favor and kind of put the big picture of what you think’s happening and the dollar loss at the very top.”
Timothy Wu, Supervisory Special Agent, Financial Crimes Section, Money Laundering, Forfeiture, Bank Fraud Unit, with the FBI, agreed. “I really think it’s the most impactful language upfront, that really drives the whole process and can make it a lot easier,” he said.
Per the panel, there’s a number of different scams floating around. Phishing, investment scams, personal data breaches, wire fraud and business email compromised schemes all are important to be aware of, among many others.
Berta took a moment to remind attendees of the danger of elder fraud. “Of the $10 billion lost in 2022 reported to the IC3, over $3 billion related to individuals 60 and above,” he said. “It’s sad, we’re seeing more and more of it and it’s something that we’re keenly aware of and working toward continuing on the efforts.”
Specific to the mortgage industry, Wu cited examples such as advance fee scams and HELOC scams.
He also noted deed scams, “so where folks are essentially assuming ownership of properties that are usually vacant. They’re either commercial or residential and they’re able to take out loans on that property that does not belong to them, without knowledge of the owner.”
He tied those kinds of scams, in part, to the increased prevalence and sophistication of faked documentation.
“You guys are in the mortgage business. And one of the biggest investments people will make is buying a home. So you are a target-rich audience. People are targeting title companies, real estate brokers,” Nikolakakos said. “You break into somebody’s personal email account or business email account—it’s a way into a big pot of money.”
