The US Department of Treasury's Financial Crimes Enforcement Network (FinCEN) has run an analysis on suspect transactions in the past year and found that US businesses in 2018 wired around $301 million per month to business email compromise (BEC) scammers.
The $301 million in average monthly losses is far higher than the FBI's estimate that US firms lost $1.3 billion in 2018 to BEC scams, however the trends on BEC from both organizations roughly align.
FinCEN's figures are based on "suspicious activity reports" (SARs) submitted to it by US financial institutions to help it counter money-laundering and terrorist financing.
The lucrative scam typically involves criminals compromising an email account of an employee, business partner or supplier, and then instructing the victim to wire funds to a fraudster's account.
FinCEN says the number of SARs describing BEC fraud has climbed from 500 per month in 2016, when total monthly losses averaged $110 million, to 1,100 BEC-related SARs per month in 2018.
Businesses in the manufacturing and construction industries are currently the most targeted, accounting for a quarter of BEC cases in 2018. But basically all businesses can become victims to BEC fraud.
FinCEN found the number of victims from commercial services including landscaping, retail, restaurants and hotel lodgings rose from 6% of reported incidents in 2017 to 18% in 2019. Over the same period, incidents affecting financial firms fell from 16% to 9%.
FinCEN speculates that manufacturing and construction businesses are attractive targets because they have regular interactions with overseas suppliers that frequently require funds to be wired.
Attacks on real estate firms are also on the rise and, thanks to these businesses handling large transactions, BEC losses represent 20% of the total despite only accounting for 9% of all incidents.
In most cases, victims sent or attempted to send funds to US accounts that are probably local money mules who serve as a first step in a money laundering scheme.
FinCEN also notes that impersonating a CEO for BEC fraud is less popular today, accounting for just 12% of BEC attempts in 2018, down from a third in 2017.
The dominant technique today is using fraudulent vendor and client invoices, which grew from 30% in 2017 to 39% in 2018. FinCEN references the case of a Lithuanian man who conned "multinational firms" into wiring at least $100 million to overseas accounts he controlled. Those companies were Google and Facebook. The man, Evaldas Rimasauskas, in March pleaded guilty to defrauding the companies of $123 million by spoofing invoices from Taiwanese hardware supplier Quanta.
There is some good news despite the seemingly unstoppable growth of BEC fraud: FinCEN claims its rapid response program, backed by law enforcement, recently topped $500 million in recovered funds. Still, that's less than 20% of the $2.9 billion the FBI estimates US businesses have lost since 2013.
"Under the program, when U.S. law enforcement receives a BEC complaint from a victim or a financial institution, the relevant information is forwarded to FinCEN, which moves quickly to track and recover the funds," FinCEN explains.
"The program utilizes FinCEN's ability to rapidly share information with counterpart Financial Intelligence Units (FIU) in more than 164 jurisdictions, and leverages these relationships to encourage foreign authorities to intercede and hold funds or reverse wire transfers."