18 July, 2016
Watch out for email scams! According to the South China Morning Post("SCMP"), Hong Kong is in the grip of a multimillion-dollar email scam crisis. More and more companies have fallen prey to fraudulent requests for payments to foreign accounts – an increase of more than a third since last year, according to the Hong Kong police.
Hong Kong has undoubtedly become the fraudster’s favourite for nefarious activities. A victim company is rarely suspicious when it is asked to wire funds to an account in Hong Kong – well, why should it be? It is Asia’s international financial hub after all.
Businesses working with foreign suppliers and businesses which regularly perform wire transfer payments should take extra precautions when they receive requests to wire funds, particularly by email and even more so when the request involves payment to a "new"account.
The fraudsters' tricks of the trade
Impersonation is probably the most common type of scam. The fraudster impersonates a familiar contact/supplier or a business executive within the company. And before that, they do their homework. They spend months monitoring and studying their selected victim. They can then accurately identify the individuals and protocol necessary to process payments within that business.
The fraudster then comes up with a visually-similar email address. The spoofed email will ask the recipient, often an employee who is normally responsible for processing payments, to make wire transfers to an alternate account. The content of the email might mimic a legitimate email request, with payment amounts and payment instructions very similar to a normal business transaction. The employee transfers the funds to the alternate account oblivious to the fact that the account is controlled by a fraudster. The fraudster quickly disperses the monies. And that is it.
Goodbye, money.
The fraudster repeats the same trick until someone in the company becomes suspicious.
Scam indicators
When handling tens and even hundreds of payment requests, it is very easy to overlook a suspicious email. The good news is there are steps companies can take to minimise the risk of exposure to this type of scam.
Keep an eye out for the following:
- requests that payments are to be sent to a different account to usual;
- requests that fall outside the regular payment schedule;
- sender's email address closely resembles that of a regular contact or an executive within the company but with a minor difference (easier said than done!);
- requests not to discuss the matter with anyone else within the company.
- unusual "extremely urgent" requests for payments; and
- emails with unusually poor spelling and grammar.
When a fraud is suspected
The bad news is fraudsters are getting cleverer. In the unfortunate event that you are scammed and funds have been transferred to an account in Hong Kong, follow these steps and you may be able to recover stolen monies:
- Report to the relevant local police outside of Hong Kong and the Hong Kong Police
The Hong Kong Police will often freeze the monies if they are satisfied that the funds in the account may be the proceeds of crime.
- Seek legal advice
You legal adviser will gather information and advise on the best legal course of action to recover your monies.
- Apply for a disclosure order from the court
You can find out precisely how much is left in the account and trace where the missing money has gone.
- Apply for a Mareva injunction to freeze the monies
The Hong Kong police cannot freeze the account indefinitely. Get a court order and the account will remain frozen whilst you go after the fraudster.
- Sue the fraudster
Commence civil proceedings and recover any money back which has been successfully frozen.
One final tip
You may not be the fraudster's only target. Monies in the account may also be claimed by other victims. Remember, monies are claimed on a first-come, first-served basis. Act swiftly and start civil proceedings if you want to make a recovery.
If no claims are brought against the monies in the account, the Hong Kong Government may apply to the Court to confiscate the funds as the proceeds of crime. After that, the money will be long gone and the victim left with no recourse.
