The cyber–crime network really keeps the real estate and banking industry on its toes. Readers know the genius minds of the cyber–criminals have been targeting the real estate settlement industry since 2013 by hacking into emails in an attempt to divert proceeds. Below are intricacies of how the crime is perpetrated:
- Criminals hack the emails going back and forth between the real estate agent, the settlement agent and the seller. They wait until the messages indicate a closing is imminent. They create an email account that looks like a real estate agent's account, an attorney's account or an account belonging to one of the sellers, then email wire instructions to escrow.
- The emailed wire instructions list the real name of the seller in the transaction as the account holder with the crook's account number, as the crooks know many banks do not perform a name–to–account match on incoming wire transfers.
- The REAL account holder is always an entity, not an individual. The criminals convince a U.S. Citizen to create the entity and obtain a taxpayer identification number. The criminals explain they are going to involve the U.S. Citizen in a legitimate business deal and split some of the profits. They claim they need help moving the money, ultimately making the U.S. Citizen the money mule.
- The criminal sends fraudulent emails purporting to be from a party to the transaction (either from the compromised account, or a similar–looking email address) to the settlement agent demanding confirmation the wire was sent. Once confirmed, the criminal sends the account holder to the bank to withdraw all the cash and send the majority to Europe or Nigeria via money transfer.
- When the seller comes looking for their proceeds, the settlement agent often confirms the wire by providing the federal reference number for the wire was already sent — wasting precious time that could be used to recover the stolen money.
- TIME IS OF THE ESSENCE — when the wire diversion becomes known or even suspected, escrow needs to immediately escalate the matter so that prompt action can be taken — hours can matter.
Settlement agents should not wire funds based on an email message or a document containing wire transfer information that is transmitted via email. When wire transfer instructions are received, the settlement agent should pick up the phone and call the principal at a known, trusted number and verify the contents of the wire instructions. The settlement agent should document the file with the name of who they spoke to, the number called and the date the conversation took place.