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Safeguarding Wealth

Safeguarding Wealth – The Pitfalls of Wire Transfers for Family Offices

Protecting your Clients from Wire Fraud


Family offices manage the financial affairs of high-net-worth families and play an essential role in cash management, bill payment services, and effective risk management. However, with great wealth comes great responsibility, especially when it comes to protecting assets from potential threats like wire fraud. In this article, we'll explore the risks associated with manual wire transfers and why family offices should consider alternative, more secure payment methods.


The Growing Threat of Fraud:

High-net-worth individuals are more likely to be victims of fraud, which means family offices need to employ extra protection to their assets in an ever-evolving digital landscape. Manual wire transfers, while once a standard practice, now pose a significant risk due to their susceptibility to various fraudulent activities, including:

Phishing Attacks:

Cybercriminals are utilizing increasingly sophisticated phishing techniques to trick employees into disclosing sensitive information. Family offices, handling substantial sums of money, are prime targets.

Wire fraud typically happens in two different forms that are often associated with phishing emails. The first is when a scammer impersonates a client or another employee and asks them to conduct a financial transaction for them. They may send an email to a colleague asking them to make a payment on a client’s behalf. The second common scam is when a hacker intercepts a legitimate wire transfer and asks you to change the wire instructions at the last minute.

Scammers that are posing as colleagues, trusted advisors, or clients are trying to get your clients’ confidential account information and exploit it or convince you to wire funds to them.

Manual wire transfers create opportunities for attackers to intercept communications and manipulate payment instructions. Once the wire goes through it’s almost impossible to resolve, because the money becomes untraceable.

Invoice Fraud:

Hackers can exploit the manual nature of wire transfers by tampering with invoices or creating fake ones. Family offices relying on manual processes may inadvertently pay fraudulent invoices, resulting in significant financial damages and loss of trust.

Social Engineering:

Family office staff, especially when under time constraints, may fall victim to social engineering tactics, leading to unauthorized transfers. Social engineering is a psychological manipulation technique used by scammers to deceive individuals into divulging confidential information, performing actions, or making decisions that are not in their clients’ best interest. This method exploits human psychology rather than relying on technical vulnerabilities.

One of the best ways to minimize all the risks associated with manual wire transfers is to use a bill pay system that has built in controls to prevent and detect fraud. While there are many accounting and bill pay systems out there, AgilLink brings the security and control under one platform. Here are some compelling reasons to make the switch:

Enhanced Security:

As an affiliate of City National Bank, AgilLink employs bank level security protocols and safeguards. These enhanced security features, such as two-factor authentication, payee positive pay (to defend against check fraud), help protect against the risk of identity theft, fraud, and other types of cybercrime. This provides peace of mind to families who are concerned about the security and privacy of their financial information

Audit Trails:

AgilLink provides detailed audit trails, offering full transparency into every transaction. This feature is invaluable for identifying and addressing any irregularities promptly. For example, in AgilLink, you can quickly compare previous bills to new ones, so that family offices can spot a fake invoice, before payments are issued. AgilLink also provides end to end transaction transparency by tracking when a user creates, modifies, approves, or voids a transaction.

Streamlined Processes:

AgilLink streamlines the entire bill payment process, reducing the likelihood of human error. This efficiency not only saves time but also minimizes the chances of falling victim to social engineering tactics.

Real-Time Monitoring:

AgilLink allows for real-time monitoring of transactions, enabling family offices to detect and respond to any suspicious activity promptly. Having real-time visibility current day allows for daily bank reconciliation. Which enables the family office to detect unauthorized transactions very quickly.

In an age where financial fraud is more prevalent and sophisticated than ever, family offices must improve the security of their assets. Moving away from manual wire transfers and embracing controlled payment systems is a crucial step in safeguarding wealth and maintaining the trust of high-net-worth clients. By making this strategic shift, family offices can better protect their client’s assets and maintain their trust.

This article and the information contained herein is for general information and education only. It is provided as a courtesy to the clients and friends of AgilLink. AgilLink, as a matter of policy, does not give tax, accounting, regulatory or legal advice, and any information provided should not be construed as such. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations.  You should consult with your other advisors on the tax, accounting and legal implications of actions you may take based on any strategies presented, taking into account your own particular circumstances.

AgilLink is an RBC company and an affiliate of City National Bank Member FDIC.

City National Bank is a subsidiary of Royal Bank of Canada. Deposit products and services are provided by City National Bank.